Could a builder and separate landowner transfer a completed Florida home with one deed and one documentary stamp tax payment?

Subject

One Deed for a Completed Home and Its Land

Plain-English summary

Florida did not require separate deeds for the completed dwelling and the underlying lot. The builder and the entity holding title to the land could both sign one deed conveying the improved property to the homebuyer.

Documentary stamp tax was then paid once on that single deed. Because the deed was delivered after construction was complete, the tax base was the total consideration paid for both the land and the dwelling.

The taxpayers had previously used two deeds—one from the builder and one from the landowner—and paid stamp tax on both instruments in varying amounts. The ruling approved the later one-deed structure with both owners as grantors.

What this means for you

Where different entities own the building and land before closing, Florida documentary stamp law did not itself require two conveyance instruments under these facts. A joint deed could transfer the combined improved property.

Using one deed did not remove the improvements from the tax base. The entire land-and-home consideration remained subject to the deed tax when delivery occurred after completion.

Common questions

Q: How many deeds were required? One deed was sufficient if both the builder and landowner signed as grantors.

Q: How many times was documentary stamp tax paid? Once on the single deed.

Q: Was tax based only on the lot price? No. It was based on total consideration for the land and completed dwelling.

Q: Why did construction timing matter? The cited rule said that when the deed is delivered after construction is completed, the tax applies to total land-and-improvement consideration.

Q: Can another builder rely on this ruling? No. The advisement binds the Department only for the requesters and the facts described.

Citations and references

• Fla. Stat. § 201.02(1) — documentary stamp tax on deeds
• Fla. Admin. Code r. 12B-4.013(23) — combined sale of land and improvements
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 98B4-001

Original ruling text

Feb 25, 1998

Re: Technical Assistance Advisement No. 98(B)4-001
Documentary Stamp Tax; Number of Deeds Needed to Transfer
Improved Property
Section 201.02(2), F.S.
XXX (Taxpayer 1)
XXX (Taxpayer 2)
XXX (Taxpayer 3)

Dear :

This is in response to your letter dated November 24, 1997,
requesting a Technical Assistance Advisement regarding the
applicability of documentary stamp tax under the facts as set
forth herein.

STATEMENT OF FACTS

Taxpayer 1 engages in the construction of residential
dwellings for profit. Taxpayers 2 and 3 hold title to
unimproved lots on which Taxpayer 1 builds homes for sale.

Prior to the institution of litigation between the
Department and the taxpayers, each time Taxpayer 1 sold a home,
two deeds were prepared in favor of the purchaser: one from
Taxpayer 1, and the other from either Taxpayer 2 or 3 (depending
upon which entity held title to the land itself). Documentary
stamp tax would be affixed to both of these deeds, in varying
amounts.

After the institution of litigation between the Department
and the taxpayers, the taxpayers changed their practice, and had
one deed prepared, from both Taxpayer 1 (as the contractor and
owner of the home) and either Taxpayer 2 or 3 (as the owner of
the underlying real estate to the purchaser of the dwelling.) A
representative of both Taxpayer 1 and either Taxpayer 2 or 3
signed the deed, and documentary stamp tax would be paid only
one time on the transaction represented by the single deed,

signed by the representative of two of the taxpayers listed
herein.

REQUESTED ADVISEMENT

You are requesting advice as to whether documentary stamp
tax only has to be paid with respect to one instrument, and
whether the amount of tax is based on the consideration for the
land and the improvements.

DETERMINATION

Section 201.02(1), F.S., imposes a tax of $.70 per hundred
dollars or fraction thereof on deeds, "... whereby any lands,
tenements, or other real property or any interest therein, shall
be granted, assigned, transferred, or otherwise conveyed to, or
vested in, the purchaser or any other person by his or her
direction...." Rule 12B-4.013(23), F.A.C., titled "Combined Sale
of Land and Improvements" states that where conveyance of realty
is made by a corporation or person engaged in the business of
land sales and construction of buildings and other improvements,
stamp tax is imposed on the conveyance based on the amount of
consideration paid or to be paid upon delivery of the deed to
the purchaser. If the deed is not delivered until construction
is completed, stamp tax is required on the total consideration
paid for the land and improvements, regardless of the date of
recordation. However, proper stamp tax shall be paid when the
deed is recorded.

In this case, the deed is delivered to the purchaser after
construction is complete. Therefore, the documentary stamp tax
is based on the land and dwelling. Documentary stamp tax law
does not require that transfer be accomplished by two deeds. If
the transfer is accomplished using one deed, with the grantors
being both the builder and the owner of the underlying real
estate, documentary stamp tax is required once on the deed, and
it is based on the total consideration for the land and
improvements.

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,

Joy B. Eldred, C.P.A.
Tax Law Specialist
Technical Assistance and Dispute Resolution
Office of General Counsel

JE/mh