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Mortgage registry tax

2 min read
Short answer
Mortgage registry tax is Minnesota's tax on recording a mortgage, calculated at 0.0023 of the debt secured, with Hennepin and Ramsey counties adding 0.0001. The borrower is the party liable. It applies to purchase mortgages and to refinances where a new mortgage is recorded, which is a cost people frequently forget when comparing refinance offers.

Mortgage registry tax is Minnesota's tax on recording a mortgage. It is charged on the debt being secured, not on the property's value, and the borrower pays it.

The rate#

0.0023 of the debt secured — 0.23 percent — under Minn. Stat. 287.035.

Hennepin and Ramsey counties add the same Environmental Response Fund tax of 0.0001 that applies to the deed tax, taking the effective rate there to 0.24 percent.

On a $200,000 mortgage: $460 statewide, $480 in Hennepin or Ramsey.

Like the deed tax, the rate has been unchanged since 1987.

Who pays#

The mortgagor — the borrower — is the party liable, and that is set by statute rather than by local custom.

This differs from the deed tax, where allocation between buyer and seller follows whatever the purchase agreement says.

It applies to refinances too#

The point most often overlooked.

A refinance records a new mortgage, and a new mortgage attracts the tax. On a substantial loan that is several hundred dollars, and it does not appear anywhere in a rate comparison.

Anyone weighing a refinance should be looking at total costs on the Loan Estimate rather than at the rate alone — this is one of the line items that makes a marginal refinance not worth doing.

Deed tax and mortgage tax together#

Most purchase transactions trigger both, and they are calculated on different bases.

Deed tax on the net consideration — what the property sold for.

Mortgage registry tax on the debt secured — what was borrowed.

A cash purchase pays deed tax and no mortgage tax. A refinance pays mortgage tax and no deed tax. A financed purchase pays both, on two different numbers.

On a $200,000 purchase with a $160,000 mortgage in a non-ERF county, that is $660 plus $368 — just over a thousand dollars in transfer taxes, which is worth having in the closing arithmetic before it appears on the settlement statement.

Exemptions and documentation#

Exemptions exist under ch. 287, including certain agricultural mortgages and affordable housing loans made by government agencies.

Claiming an exemption, or documenting the basis of the tax, uses the state's MRT1 form. As with the deed tax, an exemption has to be claimed at recording rather than recovered afterward.

Where the money goes#

Counties collect it, retain a small administrative share, and remit the rest to the state. In Hennepin and Ramsey the ERF portion funds local environmental response and remediation work.

Common questions

How much is mortgage registry tax?
0.23 percent of the debt secured — $460 on a $200,000 mortgage. Hennepin and Ramsey counties add 0.01 percent, taking the same mortgage to $480. It is charged on the amount of the loan, not on the property's value.
Do I pay it again when I refinance?
Yes, where a new mortgage is recorded, and that catches people comparing refinance costs. On a large loan it is a meaningful sum that does not appear in a rate comparison but does appear on the Closing Disclosure.
Who is liable for it?
The mortgagor — the borrower. That is set by statute rather than by custom, unlike the deed tax where the allocation follows the purchase agreement.
Keep reading
Deed tax
Minnesota's transfer tax on recorded conveyances, charged at 0.33 percent of net consideration with an additional levy in Hennepin and Ramsey counties.
Closing costs
The fees and prepaid items paid at a property closing, separate from the down payment, typically running several percent of the purchase price.
Loan Estimate
A standardised three-page disclosure a lender must provide within three business days of a mortgage application, setting out the rate, payment and costs.