On May 9, 2025, Governor Brian Kemp signed House Bill (HB) 586 into law, which states that effective July 1, 2025, the bill introduces amendments to the state’s intangible recording tax provisions, offering notable benefits for lenders and borrowers.
What Key Changes Are Introduced by HB 586?
- Extended Maturity for Short-Term Notes: The bill redefines “short-term notes” by extending the maturity threshold from 36 months to 62 months. Loans falling within this new window may now qualify for exemption from Georgia’s intangible recording tax, which can lead to substantial cost savings.
- Updated Definitions: The definition of a “long-term note secured by real estate” has been revised to align with the new 62-month threshold, meant to increase clarity and consistency in loan classification.
- Compliance Requirements: To benefit from tax exemption, loan instruments must explicitly state the amount and due date, or indicate that the note matures within 62 months, in accordance with Code Section 48-6-66.
What Are Implications for Lenders and Borrowers?
- Expanded Lending Opportunities: Since the maturity threshold for short-term notes is extended to 62 months, lenders may not offer medium-term financing that qualifies for intangible recording tax exemptions. This means that a broader range of loan offerings may become more attractive to borrowers because of lower associated costs.
- Lower Closing Costs: Borrowers can now avoid the intangible recording tax in Georgia on loans up to 62 months, resulting in savings particularly in high-value transactions.
- Fewer Tax Obligations: With an extended maturity window, borrows can negotiate more favorable repayment schedules that don’t trigger certain tax obligations, which is attractive and useful for businesses looking for working capital or bridge financing.
To determine how HB 586 might impact your tax obligations and financing strategies, contact Tim Clancy and Micah Greenberger of Windham Brannon.
