Would Florida impose additional stamp or intangible tax when property was conveyed to a partnership already liable on the note and the partnership later renewed it?

Subject

Exempt Renewals of a Note and Mortgage

Plain-English summary

No additional documentary stamp tax was due when the partnership later renewed the note, provided the individual and partnership were both original obligors and all other requirements of the renewal exemption were met. Both parties had executed the original note and mortgage and were jointly and severally liable before the individual conveyed the property to the partnership.

The conveyance also did not trigger additional nonrecurring intangible tax. The ruling relied on the prior payment of that tax and the fact that the indebtedness remained the same.

What this means for you

The ruling turned on the partnership already being an original obligor, not merely assuming a stranger's debt after the conveyance. It also made the documentary-stamp result conditional on every other requirement of section 201.09.

Common questions

Q: Did conveying the property to the partnership create additional documentary stamp tax on a later renewal? No, on the stated joint-obligor facts and if the renewal otherwise qualified under section 201.09.

Q: Did it create additional intangible tax? No. The tax had previously been paid and the debt amount remained unchanged.

Q: Would the result necessarily apply if the partnership had not signed the original note? No. The ruling specifically relied on both parties being original obligors.

Citations and references

• Fla. Stat. § 201.08(1) — documentary stamp tax on notes and renewals
• Fla. Stat. § 201.09 — renewal-note exemption
• Fla. Stat. § 199.145(3) — assumption of a previously taxed note
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93M-005

Original ruling text

Aug 02, 1993

Re: Technical Assistance Advisement No. 93(M)-005
Documentary Stamp Tax & Intangible Tax
Conveyance of Property from Individual to Partnership where
both are liable on Note and Mortgage
XXX (Individual)
XXX (Partnership)
XXX (Corporation)

Dear :

This is in response to your request for a technical
assistance advisement.

Facts

Individual entered into a contract to purchase certain
property of Corporation.

In order to complete the purchase, it was necessary for
Individual to obtain a First Mortgage from a lending institution
for a portion of the purchase Price. The promissory note
evidencing the debt and the mortgage securing the same were to
be executed and signed by Individual and by Partnership.

The purchase of the property was consummated and a
promissory note and mortgage were executed by Individual and
Partnership to the lending institution. A warranty deed from
Corporation to Individual conveying property was also recorded.

Appropriate documentary stamp and intangible taxes were
paid on these documents.

In the event Individual conveys the property to
Partnership, Individual will remain personally liable on the
mortgage to the same extent as prior to the conveyance.

Requested Advisement

Since Individual and Partnership are both liable on the
mortgage, will the subsequent conveyance of the title to
Partnership result in the transaction being taxable pursuant to
s. 201.08(1), F.S., or exempt under s. 201.09(1)(2), F.S.? In
addition, is the same exempt under s. 199.145(3). F.S.?

Discussion and Law

Section 201.08(1), F.S., provides that promissory notes
executed, delivered, or transferred in the state, and for each
renewal of same, the tax shall be 35 cents on each $100 or
fraction thereof of the indebtedness or obligation evidenced
thereby.

In order to be exempt from taxation under s. 201.09, F.S.,
a renewal note shall not be executed by any person other than
the original obligor.

If Individual and Partnership are both jointly and
severally liable on the note and mortgage, the conveyance to
Partnership and the subsequent renewal by either party, will not
be subject to documentary stamp tax imposed under s. 201.08,
F.S., if all other requirements under s. 201.09, F.S., are met.

Section 199.145(3), F.S., provides that no additional
nonrecurring intangible tax shall be due upon the assumption of
a note, if the tax was previously paid and the amount of the
indebtedness remains the same, whether or not the original
obligor is released from liability.

Conclusion

Based upon statutory provisions and the information
provided with your request, no additional documentary stamp tax
imposed under s. 201.08, F.S., would be required on a subsequent
renewal by the Partnership, if all other requirements under s.
201.09, F.S., are met.

In addition, the transaction would not be subject to
additional intangible tax in accordance with s. 199.145, F.S.

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