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