Was documentary stamp tax due when trustees conveyed unencumbered Florida real property to a foundation for no consideration?

Plain-English summary

The trustee's deed to the foundation was exempt from Florida documentary stamp tax. The real property had no mortgage, and the foundation would give the trustees no cash, note, or other consideration for the transfer.

The Department explained that a trustee's deed to a grantee that was not already a beneficial owner is taxed only to the extent consideration is given for the transferred interest. Consideration can include cash, a note, a release, other value, or the grantee's share of a mortgage. None was present here.

What this means for you

For the transaction described in this ruling, the foundation's tax-exempt status was part of the facts, but the Department's stated reason for the documentary-stamp-tax result was the absence of consideration and mortgage debt.

Adding assumed debt, a payment, a promissory note, a release, or another item of value would take the transaction outside the facts the Department approved.

Common questions

Q: Was the deed taxable merely because it transferred Florida real property? No. The Department applied the trustee-deed rule and found no taxable consideration.

Q: Did the foundation pay anything for the property? No cash or note was to be given, and the ruling identified no other consideration.

Q: Was there a mortgage on the property? No. The property was unencumbered, so the foundation did not assume a share of mortgage debt.

Q: Would the same result necessarily apply if debt or other value changed hands? No. The cited rule measures tax by consideration, including cash, notes, releases, other consideration, and mortgage shares.

Citations and references

• Fla. Stat. § 201.02(1) — documentary stamp tax on instruments transferring interests in real property
• Fla. Admin. Code r. 12B-4.013(33)(g) — trustee deeds, beneficial ownership, and consideration
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97B4-013

Original ruling text

Oct 15, 1997

Re: Technical Assistance Advisement No. 97(B)4-013 Documentary Stamp Tax / Trust Deeds s. 201.02, F.S. XXX (Trustees) XXX (Trust) XXX (Foundation)

Dear :

You have petitioned for a technical assistance advisement pursuant to s. 213.22, F.S., and Rule 12-11.003, F.A.C.

Statement of Facts

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

The Trust owns certain real and personal property and the purpose of the Trust is to operate the Foundation in Florida for educational and cultural purposes for the benefit of all the people of the city.

The Board of Trustees is authorized to transfer Trust assets into the Foundation, a qualifying tax-exempt organization. The real property which will be transferred from the Trust to the Foundation is not subject to a mortgage. No cash or note will be given by the Foundation to the Trustee for the transfer of the property.

Requested Advisement

Is the transfer of real property from the Trust to the Foundation exempt from documentary stamp tax?

Discussion and Law

Section 201.02(1), F.S., imposes tax on deeds, instruments,

or writings that convey, grant or transfer real property or interest in real property.

Florida Administrative Code Rule 12B-4.013(33)(g), provides that 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.

Rule 12B-4.013(33)(g), F.A.C., states in part as follows:

... The stamp tax applies to a trustee's deed of real property to grantees that are not beneficial owners as trust beneficiaries immediately before the conveyance, to the extent of the consideration given, if any, for the interest in the real property transferred to the nonbeneficiary grantees. The stamp tax is based on any cash, note, release or other consideration from the nonbeneficiary grantees, including their proportionate share of any mortgage encumbering the real property....

Department's Position

Since there is no mortgage on the property being transferred and there will be no consideration given by the Foundation to the Trustee, the deed from the Trustee to the Foundation is exempt from the documentary stamp tax.

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

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