Is Florida documentary stamp tax due when the same married owners deed property from themselves as tenants in common to themselves as tenants by the entireties?

Plain-English summary

The Florida Department of Revenue concluded that no documentary stamp tax was due when the same two people deeded the same property from themselves as tenants in common to themselves, after marriage, as tenants by the entireties.

The Department's analysis began with whether the deed conveyed any real-property interest from one party to another. It found no such conveyance because the grantors and grantees were the same two people and each held a 50% interest both before and after the deed. Changing the legal manner of holding title did not change their ownership percentages.

Because the first requirement for tax—a conveyance of an interest—was absent, the Department said it did not matter whether the transaction also involved consideration. That made the existing mortgage irrelevant to the result, even though section 201.02 generally includes mortgage debt in consideration.

What this means for you

Married property owners

On the specific facts presented, spouses could retitle property from tenancy in common to tenancy by the entireties without documentary stamp tax when both remained equal owners. The wife's use of her married surname did not create a different owner.

Real-estate and closing professionals

The ruling turns on exact continuity of the parties and ownership percentages. It does not decide a deed that adds or removes an owner, changes percentage interests, or otherwise transfers an economic interest.

Accountants and tax professionals

The Department treated the conveyance question as a threshold issue. Once it found no transfer from one party to another, it did not need to determine whether the mortgage satisfied the separate consideration requirement.

Common questions

Q: Was documentary stamp tax due on this retitling deed? A: No. The same two people owned the same 50% interests before and after the deed, so the Department found no conveyance of a real-property interest from one party to another.

Q: Did changing from tenancy in common to tenancy by the entireties count as a transfer? A: Not on these facts. The legal form of ownership changed, but the parties and their ownership percentages did not.

Q: Did the mortgage make the deed taxable? A: No. Because there was no conveyance, the Department said the consideration question—including the mortgage—was irrelevant.

Q: Would the answer be the same if an owner or percentage changed? A: The advisement did not decide that situation. Its conclusion depended on the same two parties holding equal interests before and after the deed.

Q: Can another couple rely on this TAA? A: Not automatically. The advisement states that it binds the Department only under the facts and circumstances described in the request, and later legal changes or court interpretations may produce a different result.

Citations and references

• Fla. Stat. § 201.02 (documentary stamp tax on real-property conveyances and consideration)
• Fla. Stat. ch. 201 (documentary stamp tax)
• Fla. Stat. § 213.22 (technical assistance advisements)
• Fla. Stat. ch. 119 (public records)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96B4-019

Original ruling text

Dec 20, 1996

Re: Technical Assistance Advisement No. 96(B)4-019 Documentary Stamp Tax; Deeds-Changing Manner of Holding Property Section 201.02, F.S. XXX (Taxpayer #1) XXX (Taxpayer #2)

Dear :

This is in response to your recent request for a Technical Assistance Advisement in which you ask if the Florida documentary stamp tax imposed by s. 201.02, F.S., is due upon a deed wherein the same record title holders change the manner of holding property from tenancy in common to tenancy by the entireties.

Proposed Transaction

The record title holders to property (Taxpayers #1 and #2), took title to property in their individual names prior to the time they were married to each other. These same record title holders gave a mortgage on that property in both of their names. After they were married, Taxpayer #2 assumed the surname of her husband. They now desire to hold the same property not as tenants in common, but as tenants by the entireties. Taxpayers

1 and #2 will deed the same property from their names as tenants in common to their married names as tenants by the entireties.

Requested Ruling

A deed from the record title holders as tenants in common (Taxpayers #1 and #2) to the same parties (Taxpayers #1 and #2) now as tenants by the entireties, using the wife's new married name, is not subject to documentary stamp tax under s. 201.02, F.S., even though there is a mortgage on the property by these same two individuals.

Department's Position

Section 201.02, F.S., imposes documentary stamp tax on documents which convey any interest in real property from one party to another party. The tax is imposed based on the consideration given for the transfer of the real property at the rate of $.70 per hundred or fraction thereof.

Section 201.02, F.S., effective July 1, 1990, defines consideration:

(1) ... consideration includes, but is not limited to, the money paid or agreed to be paid; the discharge of an obligation; and the amount of any mortgage, purchase money mortgage lien, or other encumbrance, whether or not the underlying indebtedness is assumed....

The first condition to be satisfied prior to the test for the basis of imposition of the tax is to determine if there has been a conveyance of any interest in real property.

The second condition to be satisfied prior to the imposition of the tax is to determine if there was consideration for the transfer of the interest in real property.

When there are two owners of the same piece of realty, unless otherwise specified in the deed, each party holds an equal percentage interest in the property as tenants in common.

It is only if these two parties are married to each other that they are entitled to hold property as tenants by the entireties. These two persons married to each other may still hold property as tenants in common if they wish. However, many married persons wish to hold their homesteads as tenants by the entireties to protect it from the claims of creditors.

To accomplish this, it is necessary to convey the property from the current record title holders' (prior) unmarried names, specifying "as tenants in common," to their (current) married names, specifying "as tenants by the entireties."

Since Taxpayers #1 and #2, grantors on the deed, and record title holders as tenants in common, are the same persons as the grantees on the deed (Taxpayers #1 and #2) as tenants by the entireties, there has not been a transfer of any interest in real property from one party to another party. The same two parties held the property in the same percentages before the transfer as after the transfer. Taxpayer #1 holds fifty percent and Taxpayer #2 holds fifty percent. This is true even though the manner of holding has changed from tenancy in common to tenancy by the entireties.

If there has been no conveyance of an interest in realty, it is irrelevant whether or not the second condition may or may not have been met. There would be no basis for the imposition of tax under Ch. 201, F.S.

Therefore, since the first condition necessary for imposition of the documentary stamp tax has not been met, there is no basis for the imposition of the tax under s. 201.02, 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 treatment different from that 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, C.P.A.
Senior Tax Specialist
Tax Policy and Dispute Resolution
Office of General Counsel

MEC/mh