When is Florida documentary stamp tax due in a reverse section 1031 exchange using an exchange accommodation titleholder?

Plain-English summary

Trustees held a 50% interest in Florida real property; an unrelated trust held the other half. For a reverse section 1031 exchange, the trustees transferred their 50% into a single-member LLC owned by an exchange accommodation titleholder (EAT). The EAT and unrelated trust later transferred the whole property to the ultimate buyer.

Florida held that the exchanger-to-EAT deed was not subject to documentary stamp tax. The Qualified Exchange Accommodation Agreement established an agent-principal relationship between them, and Rule 12B-4.014(5) does not tax a qualifying deed between agent and principal. The taxable deed was the later transfer from the EAT to the ultimate purchaser.

The parties had paid tax at the wrong stage: tax was paid on the exchanger's 50% when it moved to the EAT, while tax on the final deed covered only the unrelated trust's 50%. Because those two payments together equaled the tax due on the full ultimate sale, the Department did not require a second payment on the EAT's 50% final transfer.

What this means for you

Parking title with an EAT can be an agency transfer

The deed into the reverse-exchange structure was nontaxable because the exchange documents created the required agent-principal relationship for Florida deed-tax purposes.

The ultimate buyer's deed is the taxable event

The correct time to pay documentary stamp tax was when the EAT conveyed the relinquished property to the final purchaser.

An early payment did not cause double tax here

Florida credited the economic reality that total tax on both 50% interests had already been paid, even though one payment appeared on the wrong deed.

Exchange documents are decisive

The result depended on the specific Qualified Exchange Accommodation Agreement and section 1031 reverse-exchange structure. A title-parking arrangement without the same agency relationship may differ.

Common questions

Q: Was tax due when the exchanger deeded its interest to the EAT?
A: No. That was an agent-principal transfer under the provided exchange agreement.

Q: When should the tax have been paid?
A: On the EAT's deed to the ultimate purchaser.

Q: Why didn't Florida require another payment in this case?
A: Tax had already been paid on the exchanger's 50% at the initial transfer and on the co-owner's 50% at the final transfer, so total tax due was satisfied.

Citations and references

• Fla. Stat. § 201.02(1) (documentary stamp tax on deeds)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)
• Fla. Admin. Code r. 12B-4.014(5) (agent-to-principal deed)
• I.R.C. § 1031 (like-kind exchanges)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 08B4-007

Original ruling text

SUMMARY
Question: When should the documentary stamp on a deed be paid when the deed is part of a s.
1031, IRC exchange? Should the tax on the deed be when the deed is given to the EAT or when
the deed is given by the EAT to the purchaser?
Response: Documentary Stamp Tax is not required to be paid on the deed transferring the
Exchangor’s interest in the real property to the EAT. Documentary Stamp Tax should be paid
when title is transferred by the EAT to the ultimate purchaser
October 24, 2008
Re:

Technical Assistance Advisement No. 08B4-007
Documentary Stamp Tax – 1031 Exchange
Section 201.02 (1), F.S.
Rule 12B-4.014 (5), F.A.C.
XXX (hereafter Exchange Accommodation Titleholder or EAT)
XXX (hereafter Exchangor)
XXX (hereafter Trustees)
XXX (hereafter LLC)

Dear:
Your letter of February 22, 2008, 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 Presented by the Petitioner
The Trustees hold a 50% title to Florida real property (“Deed A”). An unrelated trust not
part of the 1031 reverse exchange holds title to the remaining 50% of the Florida real property.
Exchange Accommodation Titleholder (“EAT”) accommodated a reverse 1031 exchange under
the Internal Revenue Code for Trustees of the Exchangor. The Trustees conveyed their 50% title
in Deed A to a single member limited liability company (“LLC”) that was formed to
accommodate the reverse exchange. EAT is the sole member of the LLC. The Trustees then
acquired a “like-kind” replacement property (“Deed B”). Documentary stamps were paid on
Deed B. 100 % of the title to Deed A was transferred to the ultimate purchaser by the EAT and
the unrelated trust.
At the time the Exchangor’s 50% interest was transferred to the EAT, documentary stamp tax
was paid on 50% of the value of the real property. When title was transferred to the ultimate

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purchaser by the EAT and the unrelated trust, documentary stamp tax was paid on the unrelated
trust’s 50% of the value of the property.
Requested Ruling
You asked when documentary stamp taxes are paid on the transfer from the Exchangor to
the EAT, instead of the transfer from the EAT to the ultimate buyer of the property, whether
documentary stamp taxes need to be paid again on the transfer of the Exchangor’s 50% interest
to the ultimate purchaser.
Law and Discussion
Section 201.02(1), F.S., imposes a documentary stamp tax on deeds, instruments, or
writings that convey, grant, or transfer real property or an interest in real property.
Rule 12B-4.014(5), F.A.C., states that a deed from an agent to his principal conveying
real estate purchased with the funds of the principal is not taxable.
Based on the facts given in the request, and the requirements of s. 1031, IRC, as
amended, an agent/principal relationship existed between the Exchangor and the EAT. For
purposes of documentary stamp taxes, only the deed to the ultimate purchaser is taxable.
According to the information provided by the taxpayer, the documentary stamp tax was
paid on the Exchangor’s 50% interest in the real property when it was transferred to the EAT.
However, in 1031 reverse exchanges the Exchangor’s deed to the EAT is an agent/principal
transfer and would not be subject to documentary stamp tax. For documentary stamp tax
purposes, the taxable deed in the 1031 reverse exchange is the deed given by the EAT to the
ultimate purchaser.
Department’s Position
Based upon the information and documents provided by the taxpayer, the terms of the Qualified
Exchange Accommodation Agreement establish an agent/principal relationship for documentary
stamp tax and surtax purposes between the Exchangor and the EAT. Documentary stamp tax
was not required to be paid on the deed transferring the Exchangor’s 50% interest in the real
property to the EAT. Documentary stamp tax should have been paid when title was transferred
by the EAT and the unrelated trust to ultimate purchaser. However, since the tax was paid on the
deed to the EAT, the Department will not require a second payment of documentary stamp tax
on the portion of the deed from the EAT, transferring the Exchangor’s 50% interest in the real
property to the ultimate purchaser. Based upon the documents provided, the payment on the
deed transferring the Exchangor’s 50% interest in the real property to the EAT, plus the payment

of documentary stamp tax on the deed transferring the unrelated trust’s 50% interest in the real

property to the ultimate purchaser reflect total tax due has been paid on this transfer of real
property.
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,

J.V. Parramore, Jr.
Revenue Program Administrator
Technical Assistance and Dispute Resolution
JVP/mh
Record ID: 42262