Was Florida's nonrecurring intangible tax due on the full construction note when its mortgage covered both Florida real and personal property?

Plain-English summary

The tax was due only on the construction-note portion secured by Florida real property.

The mortgage covered both real and personal property in Florida, and the mortgagor initially paid the 2-mill tax on the note's entire face amount. An independent appraisal allocated the construction cost basis among the collateral and identified the amount attributable to real property. The ruling accepted that allocation as the taxable portion.

What this means for you

The ruling did not tax the entire note merely because Florida real property was part of the collateral. The value allocated to that real property set the taxable portion on the stated facts.

Common questions

Q: Was the full face amount of the note taxable?
A: No.

Q: What established the taxable portion?
A: The independent appraisal's allocation to Florida real property.

Q: Why was the appraisal important?
A: It allocated the construction cost basis among the collateral and identified the amount attributable to Florida real property.

Citations and references

• Fla. Stat. § 199.133 — nonrecurring intangible tax on notes secured by Florida real property
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 95C2-011

Original ruling text

Mar 16, 1995

Re: Technical Assistance Advisement No. 95(C)2-011
Florida Nonrecurring Intangible Personal Property Tax on
Construction Note
XXX (Mortgagor)
XXX (Agent for Lenders)

Dear :

This is in response to your request for a technical
assistance advisement to determine the basis for the
nonrecurring intangible tax due on the mortgage securing the
construction note.

Facts

The Construction Note is secured by a mortgage on real and
personal property located in the state. Mortgagor paid the tax
of 2 mills on the entire face amount of the note when the
mortgage was recorded in a Florida county. This was done to
avoid any possibility of underpayment of the tax.

A study was made by an independent appraiser allocating the
cost basis for the construction job to the various assets
included as collateral for the mortgage. A specific amount was
allocated to real property.

Discussion and Law

Section 199.133, F.S., provides that a one-time
nonrecurring tax of 2 mills is imposed on each dollar of just
valuation of all notes which are secured by a mortgage on real
property located in this state. Where a note is secured by
personal and real property located in this state, the taxpayer
may elect to apportion the taxes based upon the value of the
collateral, if any, to which the taxpayer by law or contract
must look first for collection. In no event shall the portion
of the note which is subject to the nonrecurring tax exceed in

value the value of the real property located in this state which
is the security.

Conclusion

Based upon statutory provisions and the information
furnished in your request, the nonrecurring intangible tax is
only due on the portion of the note secured by real property
located in this state, as shown by the appraisal.

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