Was Florida's nonrecurring intangible tax due when a recorded mortgage on Florida real property secured only a contingent guaranty?

Plain-English summary

No nonrecurring intangible tax was due when the Florida mortgages secured only a contingent guaranty. Section 199.133 taxed notes and other obligations for payment of money to the extent secured by Florida real property. A guaranty dependent on an affiliate's future default was not yet an unconditional payment obligation.

The result could change later. If the guaranty conditions were met and the mortgaged Florida property then secured an unconditional obligation, the tax would become due.

What this means for you

Recording a Florida mortgage did not by itself trigger this tax. The Department looked at what the lien actually secured at that time: a contingent guaranty or a present obligation to pay money.

Common questions

Q: Was tax due at recording? No, under the stated contingent-guaranty facts.

Q: Could tax arise after default? Yes, if the guaranty became unconditional and the Florida property then secured the payment obligation.

Q: What case did the Department rely on? West Flagler Associates v. Department of Revenue.

Citations and references

• Fla. Stat. § 199.133(1) — nonrecurring intangible tax on obligations secured by Florida real property
• West Flagler Associates v. Department of Revenue, 633 So. 2d 555 (Fla. 3d DCA 1994)
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 02C2-002

Original ruling text

SUMMARY
QUESTION: Is Florida's nonrecurring intangible tax, as
imposed under s. 199.133, F.S., due on mortgages pledging

Florida real property as collateral to secure a guaranty?

ANSWER: Based on Facts Below: No. Section 199.133(1),

F.S., imposes a one-time nonrecurring tax on the just
valuation of all notes, bonds, and other obligations for
payment of money which are secured by mortgage, deed of
trust, or other lien upon Florida real property. No
nonrecurring intangible tax is due on a guaranty or other
contingent obligation even if secured by a mortgage on

Florida real property at the time of recording.

Feb 22, 2002

Re: Technical Assistance Advisement No. 02C2-002
Nonrecurring Intangible Personal Property Tax - Florida
Mortgages Given to Secure a Guaranty
Section 199.133(1), F.S.

XXX ("Taxpayer")

Dear:

This is in response to your letter dated December 17, 2001,
requesting a Technical Assistance Advisement regarding
application of Florida's nonrecurring intangible personal
property tax as imposed under s. 199.133(1), F.S., upon certain

mortgages recorded in Florida to secure a guaranty.

Request for Advisement

Taxpayer requests the Department's advice as to whether
nonrecurring intangible personal property tax is due on the
mortgages pledging Florida real property as collateral to secure

a guaranty.

Petitioner's Position

Pursuant to s. 199.133(1), F.S., the nonrecurring

intangible tax is due on the just valuation of notes, bonds, and
other obligations for payment of money which are secured by a
mortgage or other lien upon Florida real property. A mortgage
of Florida real property to secure only a guaranty or other
contingent obligation does not secure an obligation for payment
of money and is, therefore, not subject to the nonrecurring
intangible tax. No nonrecurring intangible tax would be due on

the recorded mortgages, since they only secure a guaranty.

Law and Discussion

Section 199.133(1), F.S., states:

A one-time nonrecurring tax of 2 mills is hereby imposed on
each dollar of the just valuation of all notes, bonds, and

other obligations for payment of money which are secured by
mortgage, deed of trust, or other lien upon real property
situated in this state. This tax shall be assessed and

collected as provided by this chapter.

Florida's nonrecurring intangible personal property tax is
due on notes or other written obligations to the degree secured
by a lien on Florida real property. Mortgages placed upon
Florida real property for the sole purpose of securing a
guaranty or other contingent obligation are not subject to the

nonrecurring intangible personal property tax.

Position of the Department

In West Flagler Associates v. Department of Revenue, 633

So.2d 555 (Fla. 3d DCA 1994), the Third District Court of Appeal

held that the Florida nonrecurring intangible tax was not due in
regard to the recording of a mortgage on Florida real property
in order to secure the mortgagor's obligation under a guaranty
of the obligation of an affiliate. The Court noted that the
guaranty obligation was contingent on the default under the

affiliate's primary obligation.

It is the Department's position that the mortgages
evidencing liens on Florida real property, attached to your TAA
request as exhibits, secure a contingent obligation in the form
of a guaranty, and to the extent that the mortgages do not
secure obligations to pay money no nonrecurring intangible
personal property tax is due. The nonrecurring intangible tax
would be due if the conditions under the guaranty are met, and
the Florida real property then secures an unconditional

obligation.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the Department only
under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment than

expressed in this response.

You are further advised that this response, your request
and related backup documents are public records under Chapter
119, F.S., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department

within 15 days of the date of this letter.

Sincerely,

Charles T. Phillips
Tax Law Specialist
Technical Assistance and Dispute Resolution

Office of General Counsel

CTP/mh