Was documentary stamp tax due when grantors transferred unencumbered Florida land to a court-appointed trustee without changing beneficial ownership?

Plain-English summary

No documentary stamp tax was required when the grantors transferred legal title to the court-appointed trustee. The transfer was only meant to simplify later sales and distribution of proceeds, and each grantor's beneficial interest remained in exactly the same proportion.

The property had no mortgage or other stated encumbrance, and the trustee gave the grantors no consideration. Under the cited trustee-deed rule, a deed to a trustee is exempt when beneficial ownership does not change.

The ruling distinguished this internal transfer from the trustee's later sale to an actual third-party buyer. The request said that later buyer deed would carry the proper documentary stamp tax.

What this means for you

Moving bare legal title to a trustee can be tax-free when the same people retain the same beneficial ownership and no consideration or debt shifts. The result depends on substance, not merely the word "trustee" in the deed.

Any later change in beneficial shares, mortgage assumption, payment, release, or other value would fall outside the approved facts.

Common questions

Q: Did legal title change? Yes. Legal title moved to the court-appointed trustee so one deed could be used in later sales.

Q: Did beneficial ownership change? No. Each grantor retained the same proportional beneficial interest.

Q: Was there a mortgage or payment to the grantors? No. The property was unencumbered and the trustee gave no consideration.

Q: Did the ruling exempt a later sale to a third party? No. The facts anticipated proper documentary stamp tax on the later buyer deed.

Citations and references

• Fla. Stat. § 201.02 — documentary stamp tax on Florida real-property conveyances
• Fla. Admin. Code r. 12B-4.013(33)(a) — deeds to or from trustees and beneficial ownership
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97B4-011

Original ruling text

Sep 12, 1997

Re: Technical Assistance Advisement No. 97(B)4-011 Documentary Stamp Tax/Transfer of Real Property to a Trustee; s. 201.02, F.S. Rule 12B-4.013(33)(a), F.A.C. XXX (Grantors) XXX (Court Appointed Trustee)

Dear :

This is in response to your letter dated July 10, 1997, requesting a Technical Assistance Advisement regarding the applicability of Documentary Stamp Tax on transfers of real property to a trustee. This request is made pursuant to Chapter 12-11, F.A.C., and is issued to you under the authority of s. 213.22, F.S.

Statement of Facts

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

The court appointed a trustee to liquidate the assets and distribute the proceeds to the Grantors according to their interests. The burden and confusion in selling the Florida real estate would be greatly reduced by having the Grantors transfer legal title to a trustee. The members of the Grantors would remain the beneficial owners.

(a) There is no mortgage encumbering any of the real property which will be conveyed by the Grantors to the Trustee. (b) There is no consideration that will be given by the Trustee to any Grantor in exchange for these conveyances; to the contrary, the only purpose for the conveyances is to make it easier for the court appointed Trustee to close sales and convey title to a

real third party buyer by a single deed, which would, of course, have proper documentary stamp tax paid. (c) The complete beneficial interest in the Grantors' land in Florida will remain entirely with the members of the Grantors in exactly the same proportions as they now own; the conveyances by the Grantors to the Trustee will not alter the beneficial ownership in any way.

Your position is that the deed from Grantors to the Trustee will require only minimum documentary stamp tax.

Requested Ruling

Whether the proposed conveyance from the above Grantors to a court appointed Trustee would be subject to the documentary stamp tax.

Law and Discussion

Deeds and other transfers of interest in Florida real property are subject to tax under s. 201.02, F.S. on each $100 of the consideration therefor; the tax shall be 70 cents. For purposes of this section, 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.

As stated in Rule 12B-4.013(33)(a), F.A.C., 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 that there is consideration for the transfer. A deed to a trustee is exempt from the stamp tax if beneficial ownership is not changed.

Conclusion

When, after the transfer, the complete beneficial interest in the grantors' land remains with each grantor in exactly the same proportion as before the transfer, the conveyances by the

grantors to the court appointed trustee will not alter the beneficial ownership. Therefore, no documentary stamp tax is required for the transfer described in your letter.

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,

Baldan E. Sulker
Senior Tax Specialist
Technical Assistance and Dispute Resolution Office of General Counsel

BES/mh