Was additional Florida documentary stamp tax due when property was taken subject to, but without assuming, an existing mortgage?

Subject

Deed Subject to Mortgage

Plain-English summary

No additional documentary stamp tax was due under section 201.08 merely because the purchaser took the property subject to an existing mortgage. The purchaser did not assume the mortgage, and neither the deed nor any other submitted document showed an assumption.

The deed tax under section 201.02 had already been computed on the full purchase consideration, including the mortgage encumbering the property. With that tax paid and no assumption of the debt, the Department found no additional section 201.08 tax.

What this means for you

The ruling distinguishes taking property subject to a mortgage from legally assuming the mortgage obligation. It also depends on the deed tax having been paid on total consideration, including the encumbrance.

Common questions

Was the existing mortgage included in deed consideration? Yes.

Did the buyer assume the mortgage debt? No.

Would an assumption document matter? Yes. The ruling's conclusion depended on no assumption appearing in the deed or in any separate recorded or unrecorded document.

Citations and references

• Fla. Stat. §§ 201.02, 201.08, and 213.22
• Fla. Admin. Code rr. 12B-4.013(25), 12B-4.052(11), and 12B-4.053(19)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94B4-009

Original ruling text

Jul 22, 1994

Re: Technical Assistance Advisement No. 94(B)4-009 Documentary Stamp Tax, Deed Subject to Mortgage Section 201.08, F.S. XXX (Hereinafter Purchaser) XXX (Hereinafter Seller)

Dear :

This is in response to your request dated May 10, 1994 requesting an opinion from this office on substantially the following question:

ISSUE

If no mortgage or other debt was assumed, there were no other outstanding encumbrances against the property at the time of purchase, and proper documentary stamp taxes were paid on the total consideration for the purchase including any and all encumbrances which the property was subject to plus any other property involved in the purchase, are any documentary stamp taxes due on the deed regarding the mortgage taken subject to?

BACKGROUND

According to the technical assistance advisement request, Purchaser was a XXX limited partnership authorized to do business in Florida by the Secretary of State.

Seller conveyed the XXX property on December 17, 1982 to the Purchaser subject to the existing mortgage identified in Exhibit B recorded with the deed in OR Book XXX Page XX. The total purchase price of the property was stated as $XX including the mortgage on the property with an original principal balance of $XX. The mortgage was not assumed, but the property was simply taken subject to the outstanding mortgage. Documentary stamp tax at the rate of $.45 per $100.00 ($XX) of consideration

was paid on recordation of the deed.

DISCUSSION AND LAW

Section 201.02, F.S., requires documentary stamp tax on the total consideration for a deed including mortgages encumbering the property. In December, 1982 in XXX Florida, documentary stamp tax at the rate of $.45 per $100.00 of consideration was paid on recordation of the deed. The deed stated that the property was taken subject to the named mortgage. The request stated that the mortgage was not assumed. Pursuant to Rule 12B4.013(25), F.A.C., documentary stamp tax was computed (on the full consideration, $XX, for the deed) including the mortgage encumbering the property.

Neither the deed nor any other document submitted (whether recorded or not) showed that the existing mortgage was assumed. Therefore no tax under s. 201.08, F.S., at the then rate of $.15 per $100.00 was charged or paid on recordation of the deed.

Pursuant to Rules 12B-4.052(11) and 12B-4.053(19), F.A.C., if a mortgage is not assumed either in the deed or in a separate document, recorded or not recorded, no tax under s. 201.08, F.S., is due.

DEPARTMENT'S POSITION

Where proper documentary stamp tax is paid on the total consideration for the deed including any mortgages encumbering the property, and the mortgage(s) are not assumed, no documentary stamp tax is due under s. 201.08, 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,

M.E. Clemens
Tax Audit Specialist III
Technical Assistance

MEC/mh