How was Florida's nonrecurring intangible tax apportioned when a note was secured by both Florida real property and tangible personal property?

Plain-English summary

The nonrecurring intangible tax applied only to the portion of the note secured by Florida real property, not automatically to the note's full face amount. The mixed-collateral ratio compared the value of Florida real property with the value of all security.

Equipment generally counted as personal property unless it had become a permanent fixture. If the county property appraiser classified the electric-generation and interconnect facilities as personal property, only the land and buildings entered the Florida real-property side of the ratio.

The note portion outside the nonrecurring-tax base was subject to the annual intangible tax unless otherwise exempt. Because tax had initially been paid on the entire face amount, the ruling said an overpayment could be claimed by refund application.

What this means for you

Mixed collateral requires valuation and classification rather than an all-or-nothing mortgage analysis. The Department looked to the status and value of each security component, including whether equipment was realty or personal property.

The statute also capped the nonrecurring-tax portion at the value of the Florida real property securing the obligation.

Common questions

Q: Was the full note subject to nonrecurring intangible tax because a Florida mortgage existed? No. Only the portion attributable to Florida real-property security was included.

Q: Did electric-generation equipment count as real property? Only if it was a permanent fixture. The ruling deferred to the stated county property-appraiser classification for the facilities.

Q: What happened to the remainder of the note? It was subject to annual intangible tax unless another exemption applied.

Q: Could the taxpayer recover tax paid on too much of the note? Yes. The Department said an overpayment could be pursued through a refund application.

Citations and references

• Fla. Stat. § 199.133(2) — allocation of nonrecurring tax when an obligation has Florida real-property and other collateral
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97C2-006

Original ruling text

Sep 12, 1997

Re: Technical Assistance Advisement No. 97(C)2-006 Florida Intangible Tax - Notes Secured by Real and Tangible Personal Property - Section 199.133(2), F.S. XXX (hereinafter Mortgagor/Borrower) XXX (hereinafter Lender) XXX (hereinafter tax service)

Dear :

Your letter dated June 2, 1997, requesting a Technical Assistance Advisement has been referred to this office for response. The specific scenario for which advice has been requested is summarized below.

Statement of the Facts

The Lender issued bonds to generate funds which were then loaned to the Mortgagor. The Mortgagor purchased property which was evidenced by a note and mortgage. The mortgage included real and personal property located in the State. The nonrecurring tax was paid on the entire face amount of the note secured by the mortgage. However, it is your understanding that nonrecurring tax is due only to the extent the note is secured by real property. The portion of the note not secured by real property is subject an annual intangible tax.

The mortgaged property was appraised by a Florida tax service. Included in the appraisal of property was land, buildings, electric generation and interconnect facilities, and power purchase agreements.

Provision of the Law

Section 199.133(2), F.S., provides:

The nonrecurring tax shall apply to a note, bond, or other obligation for payment of money only to the extent it is

secured by mortgage, deed of trust, or other lien upon real property situated in this state. Where a note, bond, or other obligation is secured by personal property or by real property situated outside this state, as well as by mortgage, deed of trust, or other lien upon real property situated in this state, then the nonrecurring tax shall apply to that portion of the note, bond, or other obligation which bears the same ratio to the entire principal balance of the note, bond, or other obligation as the value of the real property situated in this state bears to the value of all of the security; however, if the security is solely made up of personal property and real property situated in this state, the taxpayer may elect to apportion the taxes based upon the value of the collateral, if any, to which the taxpayer by law or contract must look first for collection. In no event shall the portion of the note, bond, or other obligation which is subject to the nonrecurring tax exceed in value the value of the real property situated in this state which is the security. The portion of a note, bond, or other obligation which is not subject to the nonrecurring tax shall be subject to the annual tax unless otherwise exempt.

Conclusion

The Statute provides that nonrecurring tax is imposed on the obligation for payment of money only to the extent it is secured by a lien on real property. Generally, equipment is considered personal property unless it becomes a permanent fixture of the real property. If the electric generation and interconnect facilities have been determined by the county property appraiser's office as personal property, then only the land and buildings will be included in the real property ratio for ascertaining the nonrecurring intangible tax. The annual intangible tax will be due on the portion of the note not subject to the nonrecurring intangible tax.

If there is an overpayment of intangible tax, you may apply for a refund. An application has been enclosed for your convenience.

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 Enclosure: Application for Refund DR-26