What documentary stamp tax applied when an individual transferred unencumbered foreclosure property to an LLC indirectly owned through the individual's revocable trust?

Plain-English summary

The taxpayer was the sole beneficiary of a revocable trust, and that trust was the sole member of a Florida LLC. After acquiring property at foreclosure, the taxpayer proposed transferring it to the LLC.

If the property was unencumbered, no consideration changed hands, and the taxpayer continued to own the same proportion directly or indirectly after the deed, the transfer merely changed the form of ownership without changing beneficial ownership.

Only minimum documentary stamp tax was required on that deed. The Department warned that the LLC became a conduit entity and that a transfer of an interest in it within three years generally could trigger tax.

What this means for you

The no-consideration result is fragile. Mortgages, other value, changed ownership proportions, or a later conduit-entity interest transfer can change the tax.

Common questions

Did beneficial ownership change? No, under the represented trust and LLC structure.

How much deed tax applied? The minimum tax.

What later risk remained? A taxable conduit-entity interest transfer within three years.

Citations and references

• Fla. Stat. § 201.02(1) and Crescent Miami Center, LLC v. Department of Revenue, 903 So. 2d 913 (Fla. 2005), as cited in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 11B4-012

Original ruling text

Executive Director
Lisa Vickers

TAX: Documentary stamp tax
TAA NUMBER: 11B4-012
ISSUE: Transfer of property between artificial entities
STATUTE CITE(S) 201.02(1), F.S.
QUESTION: If the taxpayer is the sole beneficiary of a trust and the trust is the sole member of
an LLC, will the transfer of property from the taxpayer to the LLC and a subsequent transfer of
the property from the LLC to the trust be subject to tax?

ANSWER: If the real property is unencumbered at the time of the transfer to the LLC and the
taxpayer continues to own the property directly or indirectly in the same proportion after the
transfer as before, then, absent any other consideration, only minimum documentary stamp tax
would be required on the deed.
September 01, 2011
XXX
XXX
XXX
Re:

Technical Assistance Advisement 11B4-012
Documentary Stamp Tax-Transfer of property between Artificial Entities
Section 201.02(1), F.S.
XXX (hereinafter “Taxpayer”)

Dear XXX:
Your letter dated XXX, requests a Technical Assistance Advisement concerning documentary stamp
tax on leased equipment. This response to your request constitutes a Technical Assistance
Advisement under Chapter 12-11, Florida Administrative Codes, and is issued to you under the
authority of section 213.22, Florida Statutes (F.S.).
Facts as Presented by Petitioner
The Taxpayer is the sole owner and beneficiary of a revocable trust (the “Trust”). The Trust is
the sole member of a Florida limited liability company (the “LLC”). After the Taxpayer
acquires title to a property as the successful bidder at a foreclosure sale, the Taxpayer wants to
transfer such property to the LLC. The Taxpayer believes the facts set forth in the letter comply
with the requirements of s. 201.0201(3), F.S. The ownership of the property before and after the
conveyance is identical, because the Taxpayer is the ultimate owner and beneficiary of the
Child Support Enforcement – Ann Coffin, Director z General Tax Administration – Jim Evers, Director
Property Tax Oversight – James McAdams, Director z Information Services – Tony Powell, Director

www.myflorida.com/dor
Tallahassee, Florida 32399-0100

Technical Assistance Advisement 11B4-012
Page 2

property through the Trust and the LLC.

Request for Advisement
The Taxpayer requests confirmation that after it acquires title to a property as successful bidder
at a foreclosure sale, the property can be transferred to the LLC without incurring any liability
for documentary stamp tax other than the nominal tax of $.70.
Provisions of Law and Discussion
Section 201.02(1), F.S., imposes tax on deeds that convey an interest in Florida real property at
$.70 per $100 or portion thereof of the consideration given or received in exchange for the
property. For purposes of this section, consideration includes, but is not limited to: money paid
or to be paid and the amount of any mortgage or other encumbrance on the property conveyed,
whether or not the underlying indebtedness is assumed.
In Crescent Miami Center, LLC v. Department of Revenue, 903 So. 2d 913 (Fla. 2005), the
Florida Supreme Court determined that the transfer of the unencumbered property between the
grantor and its wholly owned grantee, absent any exchange of value, was without consideration
and was not subject to the documentary stamp tax imposed by s. 201.02(1), F.S. This transaction
merely effected a change in the form of ownership by the entities that had owned and continued
to own the property. In other words, where there was no consideration and no transfer of
beneficial interest in the property as a result of the transfer, no documentary stamp tax would
apply.
Position of the Department
If the real property transferred from the Taxpayer to the limited liability company is
unencumbered at the time of the transfer, and the Taxpayer continues to own the property
directly or indirectly in the same proportion after the transfer as before, then, absent any other
consideration, only minimum documentary stamp tax would be required on the deed.
Please be aware that the grantee under the above transaction becomes a conduit entity, pursuant
to s. 201.02(1)(b), F.S., when it takes title to the property without documentary stamp tax paid on
consideration of an amount equal to or greater than the fair market value of the property.
Generally, a transfer of an interest in a conduit entity within three years of the date the property
is acquired results in a tax 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

Technical Assistance Advisement 11B4-012
Page 3

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 Turner
Tax Law Specialist
Technical Assistance and Dispute Resolution
CT/tlf
Record ID#: 104159