Was documentary stamp tax due when a sole beneficiary moved Florida real property from a trust into that same person's IRA?

Subject

Transfer from Trust to Individual Retirement Accounts

Plain-English summary

No Florida documentary stamp tax was due on the described deed. A trust held encumbered Florida real property, and its trustee was the trust's sole beneficiary. The same person was also the sole beneficiary of an IRA held by an out-of-state custodian.

The proposed transaction would retitle the property from the trust to the IRA custodian. Because the same individual held the beneficial interest before and after the transfer, the Department concluded that the deed did not transfer beneficial ownership.

What this means for you

The ruling focused on beneficial ownership, not merely the name appearing in the title records. Its result depended on the same person being the sole beneficiary of both arrangements; a transfer involving different or additional beneficial owners would present different facts.

Common questions

Q: Did changing the titled owner to the IRA custodian trigger tax? No, not under these facts.

Q: Why was there no taxable transfer? The Department found no change in beneficial ownership because the same person was the sole beneficiary of both the trust and the IRA.

Q: Did the property have a mortgage or other encumbrance? The ruling described the property as encumbered but still concluded that no documentary stamp tax was due on this transaction.

Citations and references

• Fla. Stat. § 201.02 — documentary stamp tax provision identified in the ruling
• Fla. Admin. Code r. 12B-4.013(33) — trustee deeds are taxable to the extent they transfer beneficial ownership and involve consideration
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97B4-007

Original ruling text

Jun 03, 1997

Re: Technical Assistance Advisement No. 97(B)4-007 Documentary Stamp Tax; Transfer from Trust to Individual Retirement Accounts Section 201.02, F.S., Rule 12B-4.013(33), F.A.C. XXX (hereinafter Trustee/Beneficiary XXX (hereinafter Trust) XXX (hereinafter IRA) XXX (hereinafter Custodian)

Dear :

This is in response to your letter dated February 19, 1997, requesting a Technical Assistance Advisement regarding the application of documentary stamp tax under the facts and documents set forth herein.

Statement of the Facts

The following is the description of the transaction outlined in your letter:

The Trust holds title to encumbered real property located in Florida. The Trustee of the Trust also has an IRA which was set up pursuant to Section 408(a), U.S. Internal Revenue Code. The IRA is held with an out of state Custodian. The Trustee is the sole beneficiary of both the Trust and the IRA.

The Trustee desires to transfer the property now in the Trust to the IRA account. The properties currently titled in the name of the Trustee will be titled in the name of the Custodian of the IRA.

You request the Department's advice regarding the applicability of documentary stamp tax in the described transaction.

Provision of the Law

Rule 12B-4.013(33), F.A.C., provides

A deed to or from a trustee conveying real property is taxable to the extent that the deed transfers the beneficial ownership of the real property and to the extent there is consideration for the transfer.

Conclusion

In that the Trustee/Beneficiary is the same for both the Trust and the IRA, the conveyance of property from the Trust to the IRA would not constitute a transfer of beneficial ownership of the real property. Accordingly, no documentary stamp tax would be due in this transaction.

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,

Celestine Grantham

Senior Tax Specialist
Technical Assistance and Dispute Resolution Office of General Counsel

CG/mh