Was a debt-free mobile home's no-consideration transfer from its owners to their revocable living trust subject to Florida sales tax?

Subject

Living Trust

Plain-English summary

The mobile home's transfer to the living trust was not taxable if the owners documented it as the described gift. The grantors were also the trustees and primary beneficiaries, transferred the home for no consideration, and had no outstanding lien for the trust to assume.

At title transfer, the County Tag Office had to receive a completed Form DR-40 Sales Tax Exemption Affidavit describing the home and parties, stating that the transfer created the living trust, identifying the remaining spouse and son as beneficiaries, and confirming a gift with no assumed lien.

The ruling also said that if the trust remained unrevoked when the first spouse died, later distributions to the surviving spouse and then the son would fall under the rule for distributions to heirs.

What this means for you

Florida did not treat every trust transfer as exempt. The Department called a trust a separate legal person but allowed gift treatment because this transfer lacked business purpose, consideration, and debt assumption and met the required documentation.

Common questions

Q: Was the transfer exempt merely because it used a living trust? No. The ruling relied on the specific gift facts and affidavit.

Q: Could an outstanding lien change the result? Yes. The approved facts included no lien and no shift of economic burden to the trust.

Q: What documentation was required? A completed DR-40 affidavit submitted with the title transfer and containing the facts specified in the ruling.

Citations and references

• Fla. Stat. §§ 212.02(13), (16), 212.05(1)(a)1.b. — trusts, sales, and mobile-home transfers
• Fla. Admin. Code r. 12A-1.007(11), (26)(a)2., 6. — mobile homes, gifts, and estate distributions
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93A-014

Original ruling text

Mar 15, 1993

RE: TAA 93A-014
Sales and Use Tax
Transfer of a Mobile Home into a Living Trust
Rule 12A-1.007(26), F.A.C.

Dear :

This is in response to your letter of May 4, 1992, wherein
you requested a Technical Assistance Advisement on behalf of the
XXX, hereinafter referred to as "Organization" and XXX,
hereinafter referred to as "Members." Your letter provides in
significant part:

"The issue is whether the transfer of a mobile home is
exempt from payment of Florida State sales tax when the transfer
occurs upon the terms and conditions outlined in this request
for Technical Assistance Advisement.

"RELEVANT FACTS

"[Organization] is a non-profit corporation organized under
the laws of the State of Florida to promote the general welfare
and protect the rights and interests of manufactured/mobile home
owners. A majority of the members of the [Organization] are
retirees. As you may be aware, many people in planning their
estates are presently entering into Living Trusts whereby they
transfer assets to a Trustee which, under nearly all of the
Trusts, is the grantor and grantor's spouse. This is a popular
means by which the persons seek to avoid probate and the delays
in transfer of their property to their intended beneficiaries.
It has recently come to the attention of the [Organization] that
when the [Members] attempted to transfer their mobile home into
the name of their Trust, they were advised by the XXX [County
Tag Office] that they would be required to pay a sales tax on
the fair market value of their mobile home in order to make the
transfer. This decision by the [County Tag Office] is based
upon an unofficial opinion of a former Technical Assistant in

the Statutory Compliance section dated December 6, 1990 (copy
attached). [County Tag Office] has been using this letter as
authority to collect a sales tax when a motor vehicle or mobile
home is transferred to a Living Trust, even though there is no
consideration paid by the Trust to the Grantors.

"The Living Trust of [Members] is a written trust agreement
with [Members] as the Grantors, the Trustees and the primary
beneficiary of the Trust and their son is named as beneficiary
after both of them are deceased.

"There is no outstanding lien on the mobile home and
[Members] desire to, for no consideration, transfer the mobile
home which is in their name to their names, as Trustees. The
purpose for the conveyance is for convenience and to place their
assets into the Living Trust agreement. There is no
indebtedness on the mobile home and, therefore, there will be no
shifting of any economic burden between the individuals and the
living trust.

"LEGAL ANALYSIS

"Section 212.02(16), Florida Statutes, defines sale as any transfer of title...of tangible personal property for a consideration.' In determining whether there is a taxable conveyance, the factual context of the transaction must establish that there is areasonable determinable
consideration.' There is no consideration from the Trust to the
Grantor in this case. There is no assumption of a mortgage, and
therefore, there is no shift of economic burden which would make
this a taxable conveyance.

"Florida Statutes 212.05(1)(a)1.b. requires the payment of
a tax for an isolated sale of a mobile home, however, this
statute requires an actual sale and when this section is read
together with Florida Statute 212.02(16), it requires that there
be consideration. [Members] are not 'selling' their mobile
home, nor is there any consideration from the Trust to them.
Florida Administrative Code Section 12A-1.007(26)(a)6. exempts a
distribution to heirs of an estate. The purpose of a Living
Trust is to permit prompt distribution to one's heirs without

the necessity of probate. Florida Administrative Code Section
12A-1.007(26)(a)2. permits a donor to transfer title as a gift
when the title passes without any consideration valued in money
when there is no outstanding lien on the vehicle.

"SUMMARY AND CONCLUSION

"Under the law and circumstances set forth herein, the
[Organization] by and through the applicants, [Members],
believes that a transfer by an individual into a Living Trust
whereby the individual is a grantor to the Trust and is also a
beneficiary under the Trust is not a taxable transfer. No
consideration will be paid; there will be no assumption of debt,
and therefore, no shift in economic burden; and there is no
reasonable determinable consideration from the factual context
of such conveyances that individuals intend to make to Living
Trusts. The [Organization] has found no authority to support
the conclusion that such a transfer is a taxable transfer, nor
has the [Organization] found any authority contrary to the
[Organization's] and the [Members'] position that this
transaction is exempt from taxation either under Section
12A-1.007(26)(a)6. or Section 12A-1.007(26)(a)2.

"Pursuant to Section 12A-1.007(26)(a)6., Florida
Administrative Code, if the individual who desires to place this
property into the Living Trust were to leave the mobile home
outright to a beneficiary under a will or if the mobile home
were to pass by intestate succession, the transfer to the
beneficiary is exempt. Further, if the transfer were a
conventional built home on real property there would be only the
minimum documentary stamp tax imposed upon the owner who
transfers it to a Living Trust.

"The [County Tag Office] relies solely on the unofficial
opinion letter and does not permit a transfer to a Living Trust
without a sales tax being paid.

"Therefore, we would respectfully request your advice as to
whether the above-described transfer of a mobile home will be
exempt from the sales tax in Section 212.05(1)(a)1.b.[, Florida
Statutes]."

RELEVANT AUTHORITY

The following passages from the Florida Statutes (F.S.) and
the Florida Administrative Code (F.A.C.) are pertinent to the
issues raised in your letter.

Section 212.02, F.S., provides in part:

"(16) `Sale' means and includes;
"(a) Any transfer of title or possession, or both,
exchange, barter, license, lease, or rental, conditional or
otherwise, in any manner or by any means whatsoever, of
tangible personal property for a consideration."

Section 212.05(1)(a)1.b., F.S., provides in part:

"Each occasional or isolated sale of an aircraft, boat,
mobile home, or motor vehicle of a class or type which is
required to be registered, licensed, titled, or documented
in this state or by the United States Government shall be
subject to tax at the rate provided in this paragraph...."

Rule 12A-1.007, F.A.C., provides in part:

"(11) Mobile Homes.
"(a) For the purposes of this subsection the term `mobile
home' means and includes a structure, transportable in one
or more sections, which is 8 body feet or more in width and
which is built on an integral chassis and designed to be
used as a dwelling when connected to the required utilities
and includes the plumbing, heating, air-conditioning, and
electrical systems contained therein.
"(b)1. The sale or use of a mobile home which is not
classified as real property is considered a sale or use of
tangible personal property and is taxable. A mobile home
is tangible personal property if it is located in a mobile
home park or other place where the land on which the mobile
home is located is not owned by the mobile home owner.
"2. If a mobile home is classified as tangible personal
property, the sale, including the occasional or isolated

sale, the use, consumption, or storage for use in this
state is taxable on the full sales price.
"(26)(a) The following transfers of ownership of any
aircraft, boat, mobile home, motor vehicles, or other
vehicles of a class or type required to be registered,
licensed, titled, or documented in this state or by the
United States Government are exempt from tax, provided that
a certificate setting forth the facts and signed under
penalty of perjury accompanies the application for title
transfer or if no title certificate is required by law the
application for transfer of license or registration:
"2. A transfer of title as a gift. The application for
title or, if no title certificate is required, the transfer
of license or registration, must be accompanied by a sworn
statement which contains a description of the aircraft,
boat, mobile home, motor vehicle, or other vehicle, the
name and address of the donor, and a statement that the
title of the vehicle passed without any consideration
valued in money, whether paid in money or otherwise, and
that no outstanding lien on the described aircraft, boat,
mobile home, motor vehicle, or other vehicle is being
assumed by the applicant, to be tax exempt...
"6. The distribution to heir(s) of an estate. However, the
sale to a personal representative of an estate is subject
to the tax."

DETERMINATION

The statutes and administrative rules provide that the
sale, including the occasional or isolated sale, of a mobile
home as tangible personal property is subject to tax.

Transactions with or involving trusts are not normally
exempt from the imposition of sales or use tax. To the
contrary, s. 212.02(13), F.S., identifies a trust as a "person."
As such, a trust is a separate legal entity and transactions
with a trust and other "persons" as defined in subsection (13)
of the statute including "persons" who are parties to the trust
may be taxable.

However, under the facts of the transaction you have

described, including the character of the trust, in the absence
of a business purpose, and where there is no assumption by the
trust of any indebtedness connected to the mobile home, there is
no bar to such a transfer being effected as a gift. Further, if
the trust has not been revoked at the time of the death of the
first spouse, the transfers of the home in trust to the
remaining spouse and then to the son after the death of such
remaining spouse will not be subject to tax by operation of
subparagraph (26)(a)6. of Rule 12A-1.007, F.A.C., which provides
that distributions to heirs are not taxable.

Consequently, the transfer of the home to the trust will
not be taxable if, at the time of the title transfer, the County
Tag Office is presented with a completed Sales Tax Exemption
Affidavit, Form DR-40, setting forth the facts of the transfer
under the legend "Other." Such affidavit should include a
statement to the effect that the transfer is pursuant to the
creation of a Living Trust the beneficiary of which is the
remaining spouse and that at the termination of the trust the
home will be distributed to the son. A description of the
mobile home should also be provided together with the names and
addresses of the parties to the transfer, that the transfer was
one by gift, and a statement which notes that no outstanding
lien was assumed by the trust.

This response constitutes a Technical Assistance Advisement
under Section 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 Section 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 and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of Section 213.22,
F.S. Your name, address, and any other details which might lead
to identification of the taxpayer must be deleted by the

Department before disclosure. In an effort to protect the
confidentiality of such information, we request you notify the
undersigned in writing within 15 days of any deletions you wish
made to the request or the response.

Sincerely,

JEFFERY L. SOFF
Tax Law Specialist
Statutory Compliance

encl.
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