Which mortgage-service fees for appraisals, loan conversion, returned checks, schedules, documents, statements, research, coupon books, and insurance were taxable?
Apply this to your situation
This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.
Plain-English summary
The Comptroller classified nine mortgage-related fees.
Nontaxable:
- an appraisal performed to obtain a mortgage loan;
- a fee to convert an adjustable-rate mortgage to a fixed-rate mortgage;
- a returned-check processing fee;
- repeated or frequent balance inquiries; and
- a fee to substitute an insurance policy before the current policy expired.
Taxable:
- an amortization schedule;
- copies of loan documents provided at a time other than loan origination;
- additional or repeated updated payoff or assumption statements;
- research performed at a customer's request; and
- a replacement coupon book.
What this means for you
The historical result distinguished transaction, payment, and insurance-administration fees from sales of schedules, documents, updated information, research, and replacement books.
Common questions
Was a mortgage appraisal taxable? No.
Was an amortization schedule taxable? Yes.
Were updated payoff statements taxable? Yes, when additional or repeated.
Were frequent balance inquiries taxable? No.
Citations and references
The letter cites no numbered statute or rule.
Source
- STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
- Opinion: https://star.comptroller.texas.gov/view/8801L0853G07
Original ruling text
January 25, 1988
Dear **:
On behalf of Mr. Bullock, I hope you'll accept my apology for the delay in
answering your question involving changes in the sales tax law. This isn't the
way we normally do business.
Our people were, and still are, swamped by a deluge of inquiries as they
attempted to interpret provisions of the new law and draft rules which would
not adversely impact businesses. In many instances, an answer to a question
just wasn't available when the question arrived.
Appraisals performed for the purpose of getting a mortgage loan are not
taxable.
A conversion fee to convert an adjustable rate mortgage to a fixed rate
mortgage is not taxable.
Fees for processing a returned check (insufficient funds, account closed, etc.)
are not taxable.
Fees for amortization schedules and for copies of loan documents provided at
time other than loan origination are taxable.
Fees for additional or repeated updated payoff or assumption statements are
taxable.
Fees for repeated or frequent balance inquiries are not taxable.
A fee for research done at a customer's requests is taxable.
Fees for replacement coupon books are taxable.
A fee for substitution of an insurance policy written before the expiration of
a current policy's term is not taxable.
This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.
If you have any questions or need more information, please call our toll-free
number 1-800-531-5441. The regular number is 512/463-4600. You may write me at
the Tax Policy Division.
Sincerely,
Eddie C. Washington
Tax Policy Division
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