What Florida documentary stamp and annual intangible-tax consequences applied when a grantor transferred property to the grantor's own revocable trust?

Subject

Grantor Revocable Trust

Plain-English summary

The grantor's gift of Florida real property to the grantor's own revocable trust was not subject to documentary stamp tax, even if the property was mortgaged, so long as the grantor remained the sole lifetime beneficiary. The Department also found no additional nonrecurring intangible tax on the transfer.

For annual intangible tax, the grantor could report all taxable trust assets on the grantor's individual return and pay the tax once. Because the grantor retained the current income interest and unrestricted revocation rights, the ruling treated the grantor as owning the entire beneficial interest and allowed the natural-person exemptions described in section 199.185(2). No separate trustee return was required when the grantor reported and paid on all trust assets.

What this means for you

The ruling's result depended on a gift without consideration, a revocable trust, the grantor's retained control, and sole lifetime-beneficiary status. It addressed both the transfer taxes and the historical annual reporting rules.

Common questions

Was deed tax due on the gift to the trust? No, on the described facts, even if the real property was encumbered.

Was an additional nonrecurring intangible tax due? No.

Who could report the trust's taxable intangibles? The grantor could report all of them on the individual annual return and pay the tax.

Could the grantor claim individual exemptions? Yes, the natural-person exemptions described in the ruling.

Citations and references

• Fla. Stat. §§ 199.052(5), 199.133(1), 199.185(2), 201.02(1), and 213.22
• Fla. Admin. Code r. 12C-2.002(1)(c)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94M-008

Original ruling text

Jul 18, 1994

Re: Technical Assistance Advisement No. 94(M)-008
Documentary Stamp Tax - Chapter 201
Intangible Personal Property Tax - Chapter 199
Grantor Revocable Trust
XXX (Grantor)
XXX (Trustee)
XXX (Trust)

Dear :

Your recent request for a technical assistance advisement
has been received in this office.

Facts

On September 15, 1993, the Grantor, as grantor, and as
trustee, executed and delivered a trust agreement, dated the
same date, establishing the Trust for the benefit of the Grantor
and members of the Grantor's family. The Grantor has retained
the right, from time to time, to modify, amend, or revoke the
Trust, in whole or in part, to withdraw all or any part of the
property of the Trust, and to change beneficiaries of the Trust,
in the exercise of the Grantor's sole discretion.

The Grantor presently owns certain real property in the
state and proposes to transfer all of the Grantor's right, title
and interest in the real estate to the Trust, as a gift, without
consideration. In addition the Grantor intends to transfer, to
the Trust, cash and other intangible personal property,
including stocks, bonds, and other intangibles which are subject
to the Florida intangible personal property tax.

Based upon the statements and documents received you have
submitted several issues for consideration. The issues and our
responses are as follows:

Issue:

1. The deed or deeds transferring ownership of the
Grantor's interest in the Real Estate or other real
property to the Trust will not be subject to the
excise tax on documents imposed by Chapter 201,
Florida Statutes, whether of not the real property is
encumbered by the lien of a mortgage indebtedness.

Response:

Section 201.02(1), F.S., imposes an excise tax on
deeds, instruments, or writings whereby any lands,
tenements, or other real property, or any interest
therein, is granted, assigned, transferred or
otherwise conveyed to, or vested in, the purchaser or
any other person at his direction.

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

Issue:

2. The transfer of ownership of the Grantor's interest in
   the Real Estate or other real property to the Trust,
   whether of not subject to the lien of a mortgage
   indebtedness, will not be subject to the nonrecurring
   intangible personal property tax imposed by Part II of
   Chapter 199, Florida Statutes.

Response:

Section 199.133(1), F.S., imposes a one-time
nonrecurring tax on the just valuation of all notes,
bonds, and other obligations for payment of money
which are secured by mortgage, deed of trust, or other
lien upon real property situated in this state.

No additional nonrecurring tax is due on the transfer
from the Grantor to the Trust.

Issue:

3. The Trust has the primary obligation at law to file an
   annual intangible personal property tax return, and to
   pay the intangible personal property tax with respect
   to the intangible personal property owned by the
   Trust. Alternatively, for any period during which the
   Grantor shall have a current right to income from the
   Trust and shall retain the right to revoke the Trust
   or shall otherwise retain a beneficial interest in the
   Trust within the meaning of Rule 12C-2.002(1)(c),
   F.A.C., the Grantor may report the Grantor's
   proportionate interest in the intangible personal
   property owned by the Trust on the Grantor's
   individual intangible personal property tax return and
   personally pay (for and on behalf of the Trust) the
   intangible tax on the Grantor's proportionate interest
   in the intangible personal property held in the Trust.

Response:

Section 199.052(5), F.S., provides that the trustee of
a Florida-situs trust is primarily responsible for
returning the trust's intangible personal property and
paying the annual tax on it. The trust's
beneficiaries, however, may individually return their
equitable shares of the trust's intangible personal
property and pay the tax on such shares, in which case
the trustee need not return such property or pay such
tax.

Therefore, the Grantor may file the assets of the
Trust on Schedule E of his annual individual
intangible personal property tax return and pay the
tax.

Issue:

4. For any period that the Grantor shall have the current
right to income from the Trust and shall retain the
unqualified right to revoke the Trust or shall
otherwise retain a beneficial interest in the Trust
within the meaning of Rule 12C-2.002(1)(c), F.A.C.,
the Grantor shall be deemed to own the entire
beneficial interest in the Trust.

Response:

Yes. The Grantor would be liable for filing the
entire taxable amount held in the Trust on his annual
individual intangible personal property tax return and
paying the tax.

Issue:

5. For any period that the Grantor shall have the current
   right to income, shall retain the right to revoke the
   Trust, shall report the intangible personal property
   owned by the Trust on the Grantor's individual annual
   intangible personal property tax return and shall
   personally pay the tax, the Trust shall not be
   required to file an intangible personal property tax
   return under Chapter 199, Florida Statutes, with
   respect to the intangible personal property held in
   the Trust.

Response:

Correct. The filing of the Trust's taxable assets by
the Grantor on his annual intangible personal property
tax return and paying the tax on same would be
sufficient.

Issue:

6. The Grantor may claim the exemption from intangible
   personal property tax afforded natural persons, with
   respect to the Grantor's proportionate interest in the
   intangible personal property of the Trust that is

attributable to the Grantor's beneficial interest in
the Trust and reported by the Grantor on the Grantor's
individual intangible personal property tax return.

Response:

Section 199.185(2), F.S., says with respect to the
first mill of the annual tax, every natural person is
entitled each year to an exemption of the first
$20,000 of the value of property otherwise subject to
said tax. With respect to the last mill of the annual
tax, every natural person is entitled each year to an
exemption of the first $100,000 of the value of
property otherwise subject to said tax.

Therefore, the Grantor would be entitled to the
exemption afforded every natural person when filing an
annual individual intangible personal property tax
return and paying the tax for the taxable assets of
the Trust.

Issue:

7. The Grantor's beneficial interest as a beneficiary of
   the Trust is not separately subject to the intangible
   personal property tax imposed by Chapter 199, Florida
   Statutes, provided the Grantor shall report the
   Grantor's proportionate interest in the intangible
   personal property of the Trust on the Grantor's
   individual annual intangible personal property tax
   return and shall pay the intangible personal property
   tax attributable to the Grantor's proportionate
   interest in the intangible personal property of the
   Trust; or, alternatively, the Trust shall separately
   return its intangible personal property and pay the
   intangible personal property tax attributable thereto.

Response:

The tax would only be paid once by the Grantor as
beneficiary of the Trust pursuant to s. 199.052(5),

F.S. In this case, the Grantor will report all taxable
assets of the Trust on his annual individual
intangible personal property tax return and pay the
tax. No return will be required from the Trustee of
the Trust.

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
Tax Audit Specialist III
Technical Assistance

NCP/mh