Was a church's transfer of unencumbered real property to its wholly owned nonprofit LLC subject to documentary stamp tax?

Plain-English summary

No Florida documentary stamp tax applied to the described deed. The church transferred unencumbered real property to its wholly owned, section 501(c)(3), nonprofit LLC and received no stock, promissory note, money, or other consideration.

Section 201.02(1) bases documentary stamp tax on the consideration given for real property or an interest in it. If property other than money is consideration, its value is generally presumed to equal the fair market value of the property conveyed.

The Department applied the rule for unencumbered property conveyed from one nonprofit entity to another with no other consideration. Under those facts, the transfer was a gift, the property was deemed conveyed for no consideration, and no documentary stamp tax applied.

What this means for you

The result was narrower than a general exemption for church or nonprofit deeds. It depended on the property having no encumbrance, both sides being nonprofit entities as described, and the transferee giving nothing in exchange. Confirm the treatment separately if a mortgage, assumed debt, note, payment, ownership interest, or other consideration is involved.

Common questions

Q: Did common ownership by itself make the transfer tax-free?
A: The ruling did not rely on common ownership alone. It emphasized the nonprofit-to-nonprofit transfer, unencumbered property, and absence of consideration.

Q: Was the transfer treated as a sale?
A: No. It was treated as a gift for no consideration.

Q: Would the same result necessarily apply if the property had debt?
A: No conclusion was given for encumbered property; this ruling expressly involved unencumbered property.

Citations and references

• Fla. Stat. § 201.02(1) — documentary stamp tax and consideration
• Fla. Admin. Code r. 12B-4.014(2)(a) — nonprofit-to-nonprofit gift rule applied in the discussion
• Fla. Admin. Code r. 12B-4.012(1) — rule cited in the TAA heading

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 05B4-001

Original ruling text

SUMMARY
QUESTION: Whether a transfer of unencumbered real property from a church to its wholly-owned LLC is subject to
documentary stamp tax.
ANSWER - Based on Facts Below: Unencumbered real property conveyed from the church to its wholly-owned nonprofit LLC is considered a gift and will not be subject to tax.

February 24, 2005

Re: Technical Assistance Advisement No. 05B4-001
Documentary Stamp Tax-Conveyance from Church to non-profit LLC
Section 201.02(1), F.S.
Rule 12B-4.012(1), F.A.C.
XXX (hereinafter Church)
Dear :
Your letter requesting a Technical Assistance Advisement has been referred to this office for response. The
specific scenario for which advice has been requested is summarized below.
Facts as Presented by Petitioner
The Church purchased the property over time beginning in XX and continuing until XX. The property is
unencumbered. The Church has decided to transfer the property to its wholly-owned LLC. No stock, promissory notes,
or monetary or other consideration is being given in return for the property transferred by the Church to its LLC.
Request for Advisement
If the Church transfers unencumbered real property to its wholly-owned section 501(c)(3) tax exempt, nonprofit
LLC, will the transfer be treated as a nontaxable charitable gift from the Church to the LLC, or will the documentary
stamp tax will be imposed?
Provisions of Law and Discussion
Pursuant to s. 201.02(1), F.S., tax is based upon the consideration given in exchange for real property or any
interest therein. Where property other than money is given as consideration for the conveyance, the consideration is
presumed to be equal to the fair market value of the property being conveyed. However, where unencumbered
property is conveyed from one nonprofit entity to another, and there is no other consideration given in exchange for
the properties, the conveyance would be deemed a gift under Rule 12B-4.014(2)(a), F.A.C.

Position of the Department
The property would be deemed as conveyed for no consideration. Therefore, no documentary stamp tax would
apply.
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,
Celestine Grantham
Senior Tax Specialist
Technical Assistance and Dispute Resolution
CG/mh