How much Florida documentary stamp tax applies when mortgaged condominiums owned by one or both spouses are deeded to a trust benefiting both spouses?

Plain-English summary

A husband and wife planned to transfer seven condominium units to a trust benefiting both spouses during their lifetimes. Six units were titled only in the husband's name, while the seventh was jointly owned. Three mortgages encumbered different combinations of the units.

Florida's Department of Revenue drew the line at whether the deed changed beneficial ownership:

• Jointly owned unit: Deeding the jointly owned unit to the spouses' trust did not shift any beneficial interest. Whether or not it was mortgaged, only the minimum $0.70 documentary stamp tax was due.
• Husband-only units: Deeding each solely owned unit to a trust in which husband and wife were equal beneficiaries transferred a 50% beneficial interest to the wife. Each deed was taxable on 50% of the unit's allocated share of the outstanding mortgage principal.

For mortgages covering several units, the Department required the taxpayer to allocate each mortgage among the properties according to their relative fair market values. For each husband-only unit, the allocated balances of the applicable mortgages are added together, multiplied by 50%, rounded up to the nearest $100, divided by 100, and multiplied by the statutory rate of $0.70 per $100. The ruling expressly notes an exception to that stated rate for Dade County.

What this means for you

Moving property into a trust is not automatically tax-free

Florida looks beyond the trustee's title to the people receiving the beneficial interests. A deed can owe only minimum tax when the owners and trust beneficiaries are unchanged, but it can become taxable when the trust gives another person a new beneficial share.

Existing mortgage debt can be consideration

Section 201.02 treats a mortgage or other encumbrance as consideration whether or not the recipient formally assumes the debt. When only part of the beneficial ownership changes, the mortgage balance enters the tax base in the same proportion.

Blanket mortgages require property-by-property allocation

If one mortgage covers several properties, the ruling allocates its outstanding principal by relative fair market value. The taxpayer must perform that allocation separately for each blanket mortgage before computing the taxable 50% share for each deed.

This was a transaction-specific 2009 calculation

The Department's answer depended on the stated ownership, equal trust interests, mortgage structure, and law then in effect. Confirm the current statute, rate, county treatment, and trust terms before recording a deed today.

Common questions

Q: Is documentary stamp tax due when spouses deed jointly owned property to their joint trust?
A: Under these facts, only the minimum $0.70 tax was due because the same husband and wife remained the only lifetime beneficial owners.

Q: What if only one spouse owns the property before the transfer?
A: When the husband alone owned the mortgaged units and the new trust made husband and wife equal beneficiaries, the Department treated the wife's new 50% interest as a taxable transfer.

Q: What amount is taxed?
A: For each husband-only unit, the tax base was 50% of that unit's pro rata share of the outstanding principal balances of every mortgage covering it.

Q: How is a blanket mortgage divided among multiple properties?
A: The ruling multiplies the mortgage's outstanding principal by a fraction: the fair market value of the individual property divided by the total fair market value of all properties securing that mortgage.

Citations and references

• Fla. Stat. § 201.02 (documentary stamp tax on deeds; consideration includes mortgage encumbrances)
• Fla. Stat. § 213.22 (authority and reliance rules for Technical Assistance Advisements)
• Fla. Admin. Code r. 12B-4.013(9) (condominium conveyances)
• Fla. Admin. Code r. 12B-4.013(22) (mortgages included in consideration)
• Fla. Admin. Code r. 12B-4.013(28) (deeds between spouses)
• Fla. Admin. Code r. 12B-4.013(29)(a)-(b) (trust transfers with and without a change in beneficial ownership)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 09B4-003

Original ruling text

Summary

Husband and wife jointly own a condominium which they wish to convey to their joint trust.
The condo is encumbered by a mortgage. Under s. 201.02, F.S., if a mortgage encumbers real
property that is owned by two persons, in this case husband and wife, only minimum
documentary stamp tax is due on recordation because there is no conveyance. The husband and
wife owned it as individuals and they still own the property once it is in their joint trust.
Where only one of two parties has title to mortgaged property which is being conveyed to a trust
for the both of these parties, documentary stamp tax is due on the 50% interest being transferred
from the person now in title to the second person who is the second beneficiary of the trust.
Therefore, 50% of the total outstanding principal mortgage balances existing on the property on
the date of the assessed deed is the basis for the tax.

April 14, 2009

XXX

Re:

Technical Assistance Advisement No. 09B4-003
Documentary Stamp Tax on Conveyances from Owners to a Trust Where Husband and
Wife are Beneficiaries for Their Lifetimes
Sections 201.02, F.S.
Rules 12B-4.013 (9), (22), (28), (29)(a)(b), F. A.C.
XXX

XXX:
This is in response to your request for a technical assistance advisement asking for an opinion on
whether a conveyance from the husband or from the husband and wife to a trust of the husband
and wife are subject to documentary stamp tax and how to calculate the tax.
FACTS AS PRESENTED BY PETITIONER

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Three mortgages encumber part or all of the seven condominium units involved in this technical
assistance advisement. Mortgage #1 encumbers units #1 through #6. Mortgage #2, a line of
credit, also encumbers units # 1 through #6 and unit #7. Mortgage #3 encumbers only unit #7.
These seven condominium units in XXX are owned by Husband and/or Wife. They wish to
convey these condominiums to a trust for the benefit of Husband and Wife.
Units #1 through #6 of the condominium units are owned in the name of Husband. Mortgage #1
and Mortgage #2, the line of credit, encumbers units #1 through #6.
Unit #7 is owned jointly in the name of Husband and Wife. This unit is encumbered by a
separate first mortgage (Mortgage #3) and also the same line of credit mortgage (Mortgage #2)
which also covers units #1 through #6.
REQUESTED RULING
You request the Department’s determination as to how to calculate the documentary stamp tax
on the deeds conveying these seven condominium units to a trust where the Husband and Wife
are the beneficiaries.

LAW AND DISCUSSION
Under s. 201.02, F.S., the basis for computing the amount of documentary stamp tax due on
conveyances of real property is termed consideration:
201.02 Tax on deeds and other instruments relating to real property or
interests in real property.
(1) On deeds, instruments, or writings whereby any lands, tenements, or other real
property, or any interest therein, shall be granted, assigned, transferred, or
otherwise conveyed to, or vested in, the purchaser or any other person by his or
her direction, on each $100 of the consideration therefor the tax shall be 70 cents.
When the full amount of the consideration for the execution, assignment, transfer,
or conveyance is not shown in the face of such deed, instrument, document, or
writing, the tax shall be at the rate of 70 cents for each $100 or fractional part
thereof of the consideration therefor. For purposes of this section, consideration
includes, but is not limited to, the money paid or agreed to be paid; the discharge
of an obligation; and the amount of any mortgage, purchase money mortgage lien,
or other encumbrance, whether or not the underlying indebtedness is assumed. . . .
Under Rule 12B-4.013, F. A. C.: Conveyances Subject to Tax.
(9) Condominium Units: Instruments conveying interest or ownership in a
condominium unit are subject to tax.

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(22) Mortgage on Property: When computing the tax under Section 201.02, F.S.,
on a deed of conveyance, the total consideration includes any mortgages
encumbering the property being transferred.
Cross Reference - subsections 12B-4.013(7), (8), (10) and 12B-4.013(31), F.A.C.
(28) Husband and Wife Deeds: Deeds transferring unencumbered property
between spouses are not taxable, except that any consideration paid by one spouse
to the other spouse for additional shares greater in value than their undivided
interest is taxable. Where the property is encumbered, tax is based on the
mortgage balance in proportion to the interest transferred by the grantor.
(29)(a) No change in Beneficial Ownership: A deed from X to a trustee is exempt
from the stamp tax to the extent of X's beneficial ownership interest as a trust
beneficiary, whether or not the real property is encumbered by a mortgage. For
example, if X owns encumbered or unencumbered real property and conveys it to
the trustee of a trust of which X is the sole beneficiary, the conveyance is exempt
from the stamp tax.
(29)(b) Change in Beneficial Ownership: If persons other than X are trust
beneficiaries, then a deed from X to a trustee is taxable to the extent of the
consideration, if any, for the beneficial interest in the real property transferred to
such other persons. The stamp tax is based on any cash, note, release or other
consideration from the trust beneficiaries other than X, including their
proportionate share of any mortgage encumbering the real property. For example,
if X owns unencumbered real property valued at $100 and X conveys the property
to the trustee of a trust of which X and Y are each 50% beneficiaries, and Y pays
$50 cash for the conveyance to the trustee, then stamp tax would be due based on
a consideration of $50.
When Unit #7 held in the name of the Husband and Wife, is transferred to the trust for Husband
and Wife (whether encumbered or unencumbered by mortgages) only minimum ($.70)
documentary stamp tax is due. This is so because there is no change in beneficial interest.
Husband and Wife are currently in title to the property, and a deed to a revocable trust where
Husband and Wife are the only beneficiaries during their lifetimes would not represent a
conveyance to another person or entity. Therefore, only minimum documentary stamp tax is
due.
The transfer of Unit #1 through Unit #6 currently held in the Husband’s name only to the trust
for Husband and Wife is a taxable transfer because of the conveyance of 50% of the interests in
Unit #1 through Unit #6 to the Wife. The amount of tax due is calculated as shown below in
item #’s I through VI.

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I.

Regarding Mortgage #1 which cover Units #1 through #6 and Mortgage #2
which covers Units #1 through #7:
Determine the proportionate value of each of the properties in these
mortgages by calculating the pro rata amount of each mortgage for each
property: Fair market value of each property divided by the total of all of
the fair market values of properties secured by the mortgage times the
outstanding principal balance. Calculate Mortgage #1 separately from
Mortgage #2.
II. Add together the outstanding principal amount of Mortgage #1 for each
individual unit under the two blanket mortgages determined in #1 above
(Mortgage #1 for 6 units, Mortgage #2 for 7 units).
III. Multiply this sum by 50 %.
IV. Round that figure up to the nearest $100.
V. Divide the resulting amount in # IV by 100.
VI. Then multiply the figure obtained in # V by $.70 cents (except in Dade County).
The resulting figure is the amount of documentary stamp tax due on each deed from grantor
(Husband) to Husband and Wife as beneficiaries of the Trust for Husband and Wife.
DETERMINATION

The only documentary stamp tax due on the deed of the condominium currently owned jointly by
Husband and Wife to Husband and Wife’s Trust is the minimum documentary stamp tax. Each
deed for the six units currently owned by Husband is subject to documentary stamp tax based on
50 percent of the pro rata portions of the outstanding principal balances of all the mortgages
pertaining to each of these six properties. The process for calculation of the tax on each deed is
shown above.
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
6of 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

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taxpayer. Your response should be received by the Department within 15 days of the date of this
letter.
Sincerely,

M. E. Clemens, C.P.A.
Senior Tax Specialist
Technical Assistance and Dispute Resolution
MEC/bb