New York Court of Appeals Maintains Credit Union Mortgage Tax

The ""New York State Court of Appeals"":http://www.nycourts.gov/ctapps/ ""ruled"":http://www.nycourts.gov/ctapps/Decisions/2012/Oct12/154opn12.pdf that mortgages issued by federal credit unions are subject to the state mortgage recording tax.

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In a case brought to the court by the Hudson Valley Federal Credit Union, the plaintiff argues that the Federal Credit Union Act's (FCUA) exemption from all taxation includes an exemption from taxes on mortgage recording.

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In the 5-1 majority opinion, ""Judge Victoria Graffeo"":http://www.nycourts.gov/ctapps/jgraffeo.htm disagrees.

""When Congress has intended to immunize ├â┬ó├óÔÇÜ┬¼├ï┼ômortgages' of federally chartered lending entities from state taxation, it has done so explicitly. ├â┬ó├óÔÇÜ┬¼├é┬ª Concomitantly, where Congress has used identical terminology in similar statutes to allow an exclusion, the absence of that terminology in an analogous statute represents a strong indication of a contrary intent,"" Graffeo writes.

Because the act contains no explicit exemption, Hudson Valley's argument is invalid, Graffeo says.

In the dissenting opinion, ""Judge Susan Read"":http://www.nycourts.gov/ctapps/jread.htm expresses her interpretation of the FCUA to mean that federal credit unions may be taxed on ""real and tangible personal property,"" which would exempt federal credit unions on the basis that mortgage recording taxes are meant for the transferal of title and not for the property itself.

New York's mortgage recording tax is 50 cents for each $100 of principal debt when a mortgage on a real property is made.