Effective July 1, 2025, the Georgia Legislature has enacted a key change to the state's intangible recording tax law that directly benefits commercial real estate owners, investors, and developers.

Under previous law, only commercial loans with terms of 36 months (3 years) or less were exempt from intangible tax. With the passage of HB 586, that exemption now applies to loans with terms of up to 62 months—just over five years.

So what does this mean for you?

What Is the Intangible Recording Tax?

Georgia levies a tax of $1.50 per $500 of the loan amount when a security instrument (like a mortgage or deed to secure debt) is recorded. For a $2 million loan, that amounts to $6,000 in tax—previously unavoidable unless the loan term was 36 months or less.

With the new law, loans of up to 62 months are now exempt—opening the door to substantial savings and more attractive loan structuring.

Why This Matters for Commercial Borrowers

1. Reduced Closing Costs

This update allows owners to avoid the intangible tax on loans structured with maturities up to 62 months. These savings directly improve project cash flows and reduce equity burdens, particularly for deals in the $1M–$5M range where every dollar matters.

Example:
A $1,500,000 loan
→ Prior to July 1, 2025: $4,500 in intangible tax
→ After July 1, 2025 (if term ≤62 months): $0 tax

2. Improved Financing Certainty

Previously, many borrowers settled for 36-month terms to avoid the tax—but that introduced refinance risk and often came with less favorable interest rates. Now, they can lock in a 5-year fixed rate with no tax impact.

This creates more flexibility in matching debt terms to hold periods, while also reducing future interest rate risk.

Example:
A value-add buyer targeting a 4–5 year exit can now structure a 60-month balloon loan—locking rate, eliminating tax, and avoiding a mid-hold refinance.

3. Strategic Loan Structuring Opportunities

The exemption applies to the maturity date, not amortization. That means borrowers can still use 20–25 year amortization schedules, while ensuring the loan matures within 62 months.

This is particularly valuable for owners focused on maximizing cash flow or minimizing debt service without extending into taxable loan territory.

Who Benefits Most?

• Owner-Users refinancing or expanding operations

• Investors executing value-add or short-term holds

• Developers using construction-to-perm financing strategies

• Brokers and Advisors offering clients clearer financing pathways with lower cost structures

Key Takeaways

• The new 62-month threshold provides a practical middle ground between short-term flexibility and long-term security.

• Borrowers can now secure favorable terms without triggering an avoidable tax.

• Cost savings of $3,000–$6,000+ per loan are realistic depending on the loan size.

• Deal structuring and lender conversations should now take this exemption into account—particularly for refinances and new acquisitions.

Next Steps

If you are planning a refinance, acquisition, or construction project in the near future, this change may materially impact your financing structure. We’re happy to help you evaluate options and run numbers on potential savings.

Feel free to reach out if you’d like to model scenarios or incorporate this into a broader investment strategy.

Sources:

• Georgia Dept. of Revenue – Intangible Recording Tax

• Georgia Bankers Association Legislative Update – April 4, 2025

• BillTrack50 – HB586 Summary