Was a mortgage-assumption agreement subject to Florida documentary stamp tax when executed and delivered outside Florida and never recorded in the state?

Plain-English summary

The mortgage-assumption agreement was not subject to documentary stamp tax under section 201.08. It was executed and delivered outside Florida, was not recorded in Florida, and was not referenced by any other recorded document. The limited partnership also had not modified the mortgage.

A future mortgage default and foreclosure action by the bank would not, by themselves, cause this assumption agreement to become taxable later.

The Department separately warned that the instrument conveying the Florida real property to the partnership was subject to the deed-tax provision in section 201.02(1). The ruling's favorable answer concerned the assumption agreement, not every document in the property contribution.

What this means for you

The result rested on where the agreement was executed and delivered and on the absence of Florida recording. Recording an assumption, recording another instrument that references it, modifying the mortgage, or using different foreclosure documents would move the transaction outside the approved facts.

Documentary stamp tax must be analyzed instrument by instrument. A nontaxable assumption agreement does not make the related real-property conveyance nontaxable.

Common questions

Q: Why was the assumption agreement not taxed? It was executed and delivered outside Florida and no evidence of the assumption was recorded in Florida.

Q: Was any document referencing the assumption recorded? No. The facts expressly said none had been recorded.

Q: Would a later default or foreclosure retroactively make the agreement taxable? No, according to the ruling.

Q: Did the ruling also exempt the deed conveying the property to the partnership? No. The Department noted that a conveyance of real property to a partnership is taxable under section 201.02(1) and the cited rule.

Citations and references

• Fla. Stat. § 201.08 — documentary stamp tax on written obligations and recorded mortgages or other evidence of indebtedness
• Fla. Stat. § 201.02(1) — tax on instruments conveying interests in real property
• Fla. Admin. Code r. 12B-4.013(10) — partnership conveyance rule cited by the Department
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97B4-012

Original ruling text

Oct 06, 1997

Re: Technical Assistance Advisement No. 97(B)4-012
Florida Documentary Stamp Tax; Assumption Agreement
Section 201.08, F.S.
XXX (Limited Partnership)
XXX (Bank)

Dear :

Your letter dated August 1, 1997, requests a Technical
Assistance Advisement regarding the applicability of Florida
Documentary stamp tax pursuant to s. 201.08, F.S., under the
facts and documents set forth herein. 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

On XXX, the Limited Partnership acquired title to real
property located in Florida. The property was acquired in the
form of a capital contribution from one of the constituent
partners of the Limited Partnership in exchange for an interest
in the partnership.

The property was subject to a mortgage in favor of the
Bank. The mortgage was originally a loan made to the
contributing partner from the Bank secured by a mortgage
recorded against the property.

In connection with the transfer of the real property to the
Limited Partnership, Limited Partnership and the Bank entered
into an assumption agreement whereby the Limited Partnership
assumed the mortgage indebtedness owed by the contributing
partner to the Bank. The assumption agreement was executed and
delivered outside Florida. The assumption agreement was not
recorded in Florida, no other document referencing the
assumption has been recorded, and there has been no modification
of the mortgage by the Limited Partnership.

Requested Rulings

You request that we affirm the following:

1. The assumption agreement is not subject to documentary
   stamp tax pursuant to Section 201.08, F.S., and
2. A subsequent default under the mortgage and
   institution of foreclosure proceedings by the Bank
   will not cause the assumption agreement to become
   subject to documentary stamp tax at that time.

Provision of the Law

Section 201.08, F.S., imposes documentary stamp tax on
promissory notes, nonnegotiable notes, written obligations to
pay money, or assignments of salaries, wages, or other
compensation, made, executed, delivered, sold, transferred or
assigned in the state and each renewal of the same. The tax
shall be 35 cents on each $100 or fraction thereof of the
indebtedness or obligation evidenced thereby. On mortgages,
trust deeds, security agreements, or other evidences of
indebtedness filed or recorded in this state, and for each
renewal of the same, the tax shall be 35 cents on each $100 or
fraction thereof of the indebtedness or obligation evidence
thereby.

Conclusion

Based on the facts as presented, the assumption agreement
was executed and delivered outside the State of Florida and
there is no evidence of the assumption being recorded in the
State of Florida. Also, no other document referencing the
assumption has been recorded in the State of Florida.
Therefore, the assumption agreement is not subject to
documentary stamp tax under Section 201.08, F.S.

A future default under the mortgage and institution of
foreclosure proceedings by the Bank will not cause the
assumption agreement to become taxable.

Note that an instrument that conveys an interest in real
property to a partnership is subject to tax under Section
201.02(1), F.S. See Rule 12B-4.013(10), F.A.C.

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