Were a Florida real-estate mortgage and the secured loan exempt when the mortgagee was a federally exempt agency?

Subject

Notes, Bonds and Mortgages to Exempt Federal Agency

Plain-English summary

The Florida mortgage was exempt from both intangible personal property tax and documentary stamp tax. The mortgagee was treated as a United States government agency under Florida's intangible-tax rule and was protected by the federal tax exemption quoted from 12 U.S.C. § 1433.

The loan was evidenced by a promissory note executed outside Florida and secured in part by a mortgage on Florida real property. The mortgage stated the portion of the outstanding note balance it secured.

What this means for you

The exemption turned on the particular mortgagee's federal-agency status and the federal statute exempting the bank, its advances, and specified obligations from state and local taxation. The ruling did not extend that treatment to ordinary private lenders.

Common questions

Q: Did Florida impose intangible tax on the mortgage? No. The mortgagee qualified as a federal agency under the cited Florida rule.

Q: Did Florida impose documentary stamp tax? No. The quoted federal statute supplied the exemption for this mortgagee.

Q: Was every transaction with a federal entity automatically exempt? No. The ruling noted Florida's general rule that transactions with federal agencies remain taxable unless Congress exempted the relevant entity or document.

Citations and references

• Fla. Stat. chs. 199 and 201 — intangible and documentary stamp taxes
• Fla. Admin. Code rr. 12C-2.003, 12B-4.002 — government obligations and federal transactions
• 12 U.S.C. § 1433 — Federal Home Loan Bank tax exemption
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93M-001

Original ruling text

Mar 22, 1993

Re: Technical Assistance Advisement No. 93(M)-001
Intangible Personal Property Tax - Chapter 199, F.S.,
Florida Administrative Code Rule 12C-2.003
Documentary Stamp Tax - Chapter 201, F.S.,
Florida Administrative Code Rule 12B-4.002
XXX (Mortgagee)
XXX (Mortgagor)

Dear :

This is in response to your recent request for a technical
assistance advisement regarding intangible personal property tax
and documentary stamp tax.

Facts

The Mortgagee has agreed to make a loan in the principal
amount of XXX to the Mortgagor. The loan will be evidenced by a
promissory note in the same principal amount which will be
executed outside of Florida.

The loan will be secured, in part, by a mortgage from the
Mortgagor to the Mortgagee which mortgage will encumber real
property located in Florida. The mortgage shall state that it
secures XXX of the outstanding principal balance of the
promissory note.

Requested Advisement

1. Whether the mortgage is subject to the Florida
   intangible tax.
2. Whether the mortgage is subject to the Florida
   documentary stamp tax.

Discussion and Law

Intangible Tax

Florida Administrative Code Rule 12C-2.003(2) provides that
property owned or issued by the United States government or its
agencies is exempt from the intangible tax. The Mortgagee is
included as a United States government agency, under Florida
Administrative Code Rule 12C-2.003.

Documentary Stamp Tax

Florida Administrative Code Rule 12B-4.002(2)(a) provides
that transactions between non-exempt parties and the United
States, its agencies or instrumentalities are taxable unless
such transactions are evidenced by documents which have been
exempted by Congress. The Mortgagee is not on the list exempt by
Congress in accordance with Florida Administrative Code Rule
12B-4.002(2)(c). However, the copy of the federal code, Title
12, Section 1433, USCA, enclosed in your letter states in part
the following:

"Section 1433. Exemption from taxation; obligation
acceptable as credit on debt of home owner.

Any and all notes, debentures, bonds, and other such
obligations issued by any bank, and consolidated Federal
Home Loan Bank bonds and debentures, shall be exempt both
as to principal and interest from all taxation (except
surtaxes, estate, inheritance, and gift taxes) now or
hereafter imposed by the United States, by any Territory,
dependency, or possession thereof, or by any State, county,
municipality, or local taxing authority. The bank,
including its franchise, its capital, reserves, and
surplus, its advances, and its income shall be exempt from
all taxation now or hereafter imposed by the United States,
by any Territory, dependency, or possession thereof, or by
any State, county, municipality, or local taxing authority;
except that in [FN1MV] any real property of the bank shall
be subject to State, Territorial, county, municipal, or
local taxation to the same extent according to its value as
other real property is taxed...."

Conclusion

Based on the statutory provisions and the information
furnished in your letter, the mortgage is exempt from intangible
personal property tax and documentary stamp tax.

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,

Nadine C. Posey
Technical Assistant
Technical Assistance

NCP/mh