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