Mortgage tax on a home equity line of credit?

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I recently remortgaged and I took out a “home equity line of credit” along with the refinance. I don’t especially need it and don’t have plans to use it, but as the loan agent put it;
“Its free for refinancing with us…. and isn’t it nice to know its there for an emergency?”

‘Well, yea!’ I thought to myself.

I was stunned to find I have to pay mortgage tax on this home equity line of credit, before and, whether or not I ever take the money. Does anyone know, if I never do use this money… can I get a refund of this tax?

  1. Reply
    April 30, 2011 at 11:38 pm

    Unfortunately you can’t. Before you pay this off or close it out be sure to ask about a pre-payment penalty. Even if you haven’t used any of the $ they may try to sock you with a charge for closing it so early.

  2. Reply
    May 1, 2011 at 12:07 am

    No, no refund.

    The tax is imposed on the recording of the instrument based on the maximum amount the credit can reach.

    Count your blessings. When HELOCs were first allowed under New York Law (and NY is the only state that taxes mortgages; other states tax borrowing, but NY taxes collateralizing with real estate) the State Tax Commission wanted to collect the mortgage tax on readvances.

    You should not have been stunned. The bank should have sent you a “good faith estimate of settlement charges” at or before the time you actually made the application. If they did not, or if they omitted the mortgage tax, then there are penalties that you could discuss with a lawyer.

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