Did documentary stamp tax apply when a mother and son deeded their own shares of mortgaged property to their own revocable trusts?

Subject

Deed to Revocable Trust

Plain-English summary

No documentary stamp tax was due when each owner transferred that owner's separate interest in the encumbered property to that owner's own revocable trust. The mother and son each held a 40% interest and each created a separate trust.

Because each grantor could revoke the trust and remained its sole beneficiary for life, the Department found no real transfer of ownership to an irrevocable third party. The mortgage did not change that result. If a deed recited "$10 and other valuable consideration," however, the minimum $0.70 stamp tax applied to that deed.

This revised ruling superseded TAA 93B4-014 from June 10, 1993.

What this means for you

The result depended on each person transferring only that person's own interest to a separately controlled revocable trust without giving another person a lifetime beneficial interest.

Common questions

Q: Did the existing mortgage make the deeds taxable? No, under the stated revocable-trust facts.

Q: Did each owner use the same trust? No. Each transferred to a separate trust for which that grantor was the sole lifetime beneficiary.

Q: When did minimum tax apply? When a deed stated "$10 and other valuable consideration."

Citations and references

• Fla. Stat. § 201.02 — documentary stamp tax on deeds
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93B4-014R

Original ruling text

Status: Supersedes TAA 93(B)4-014, June 10, 1993

Aug 27, 1993

Re: Technical Assistance Advisement No. 93(B)4-014R Revised
Documentary Stamp Tax; Deed to Revocable Trust
Section 201.02, F.S.
XXX (hereinafter Mother)
XXX (hereinafter Son)

Dear :

This is in answer to your request for a Technical
Assistance Advisement on substantially the following question:

Is a transfer of an 80% interest in encumbered property
held by Mother and Son as tenants in common: one-half
conveyed to a revocable trust for Mother and one-half
conveyed to a separate revocable trust for Son subject to
documentary stamp tax?

BACKGROUND

Mother and Son hold title to encumbered property as tenants
in common. Each is transferring his/her 40% interest in the
property to his/her own separate revocable trust.

DISCUSSION AND LAW

Under s. 201.02(1), F.S., consideration includes mortgages.
Where property is conveyed in exchange for other property, the
basis for documentary stamp tax is usually the fair market value
of the property. However, where each grantor transfers his/her
own separate interest in property to his/her own separate
revocable trust, the conveyance can be reversed by the grantor
of the trust at any time prior to the date of death. Therefore,
no real conveyance to a third party which is irrevocable has
taken place. The grantor has not relinquished ownership of the
property. It is merely held under the umbrella of a trust which

the grantor still controls through the trustee. Therefore,
since there has been no real conveyance of the property, no
documentary stamp tax is due, even if the property is
encumbered.

DEPARTMENT'S POSITION

A conveyance of one's own portion of encumbered property to
one's own revocable trust is not subject to documentary stamp
tax under s. 201.02, F.S., even where the property is encumbered
provided the grantor of the trust is the sole beneficiary of the
trust for his lifetime.

However, if the deed reads $10 and other valuable
consideration, the minimum documentary stamp tax of $.70 is
required on that deed.

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 and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of s. 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,

M.E. Clemens

Technical Assistant
Technical Assistance

MEC/mh