Loop whole: No escape try in this sale
Stories about Mark Swartz's record-setting purchase of Enniscorthy in 2001 always refer to the "reported $17 million sales price." That's because back then buyers could engage in a little sleight-of-deed to keep the sales price secret– a loophole that allowed buyers and sellers to use limited liability corporations to dodge the county recordation tax, which not only would have enriched localities, but would have revealed the purchase price to anyone who cared to look at the deed.
But thanks to a November 2004 Hook cover story– "Dodgeball: A true (real estate) story: and a tax break for the rich and famous"– and a bill sponsored in response by Del. Mitch Van Yahres, the loophole is no more. Since July 1, all property transfers in Virginia are subject to the 25-cents-per-$100 recordation tax.
Because they slipped under the wire by buying Castle Hill on June 28, three days before the law took effect, John D. Carr and Raymond E. Humiston III could technically have escaped paying taxes on their $24 million purchase. Instead, they contributed $176,886 in transfer taxes to the County's coffers, perhaps relieved not to have to take part in the charade of establishing all those fictional LLCs– and paying attorneys to do it.
One person grateful for the new law is Albemarle County assessor Bruce Woodzell. "It's important that we have all the information we can get our hands on," he says. "If we had no prices on these transactions, how would we create value?"
Hearing that the farm sold for $24 million, Woodzell admits he was "a bit off" on his assessment of Castle Hill. (He had assessed it at just $15.7 million.) With sales prices public thanks to the loophole closure, he's confident such discrepancies won't happen in the future.