Which tax applies to a new mortgage but not to an assumed mortgage?

• A. Property tax
• B. Recording tax
• C. Intangible tax
• D. Transfer tax

Answer: (C)

Intangible tax is tied to creating a new loan instrument. When you get a brand-new mortgage, a new promissory note and mortgage lien are issued, and the lender pays or passes along the intangible tax on that new debt instrument. In contrast, an assumed mortgage means you’re taking over someone else’s loan under its existing terms; there isn’t a new loan document created. Since no new mortgage instrument is issued, there’s nothing new to tax under the intangible tax scheme.

Property tax is a levy on ownership, not on the act of borrowing. Recording tax is charged when a mortgage is recorded, which can occur with a new loan; with an assumption there might or might not be a new recording depending on jurisdiction, but the essential distinction for this question is that the creation of a new loan triggers intangible tax, whereas an assumption does not. Transfer tax relates to transferring title, not the loan itself, so it doesn’t specifically target the difference between a new mortgage and an assumed one.