Was a deed from a Canadian corporation acting only as bare trustee back to the beneficial owners subject to Florida documentary stamp tax?

Subject

Real Property Held by Canadian Corporation as Bare Trustee

Plain-English summary

The deed from the bare-trustee corporation to the individual owners was not subject to Florida documentary stamp tax. The nonresident owners had purchased the Florida real estate with their personal funds and used their foreign corporation solely to hold legal title for their benefit. They needed title returned to their own names for insurance purposes.

The declaration of trust existed before the property was acquired and clearly stated the parties' intent. The corporation had no meaningful independent powers, could act only on the owners' instructions, and served only as titleholder. The owners were the beneficiaries and could require the property to be returned.

Florida treated that arrangement as an agent-to-principal relationship. Because the corporation bought and held the property for the owners with the owners' funds, its deed back to them was not treated as a taxable transfer of ownership.

What this means for you

The result depended on evidence that beneficial ownership never left the principals. A corporation's bare assertion that it was a nominee or trustee would not establish the same facts; the advisement emphasized an agreement or declaration stating that intent before acquisition and proof that the principals funded the purchase.

A trustee with significant discretion, a later-created trust declaration, different purchase funds, or a transfer involving consideration could present a different transaction from the narrow agent-to-principal deed approved here.

Common questions

Q: Why was the property being retitled? The owners said insurance requirements called for title in their own names.

Q: Did the corporation own the property beneficially? No on the stated facts. It held legal title only as bare trustee for the owners.

Q: What documents supported the tax result? A declaration of trust made before acquisition showed the intended bare-trust relationship and that the owners' funds bought the property.

Q: Are all deeds from a corporation to its shareholders tax-free? No. The ruling was limited to a corporation acting as agent or bare trustee for principals who already held the beneficial interest.

Citations and references

• Fla. Stat. § 201.02(1) — documentary stamp tax on deeds transferring Florida real property interests
• Fla. Admin. Code r. 12B-4.013(33)(i) — deeds involving a revocable trust and return to the grantor
• Fla. Admin. Code r. 12B-4.014(5) — deed from an agent to the principal for property bought with the principal's funds
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 98B4-008

Original ruling text

Jun 18, 1998

Re: Technical Assistance Advisement No. 98(B)4-008
Documentary Stamp Tax - Real Property Held by Canadian
Corporation as Bare Trustee
s. 201.02(2), F.S.;
Rules 12B-4.013(33)(i) and 12B-4.014(5), F.A.C.
XXX (hereinafter taxpayers)
XXX (hereinafter corporation or bare trustee)

Dear :

Your letter 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 taxpayers purchased Florida real property using their
personal funds. The taxpayers are non-residents of Florida and
own a foreign corporation. The corporation was created for the
sole purpose of holding the real property as bare trustee for
the benefit of the taxpayers.

The jurisdiction of incorporation generally views a trust
under common law to be a bare trust when: the trustee has no
significant powers and can take no action without instruction
from the settlor; the trustee's sole function is to hold legal
title to the property; and the settlor is the beneficiary and
can have property reverted to him or her at any time.

For a corporation to hold real property in trust, as agent
for a shareholder, the property must be acquired specifically to
be held in that manner. The parties must also enter into an
agreement or have a declaration of trust which clearly states
the intention of the parties before the property is acquired.

Request for Advisement

For insurance purposes, the property must be titled in the
name of the taxpayers. You request advice whether the
conveyance from the corporation, as bare trustee, to the
taxpayers will be subject to documentary stamp tax.

Provisions of the Law

Section 201.02(1), F.S., imposes tax on deeds which convey
real property or an interest in real property. However, as it
relates to trusts, Rule 12B-4.013(33)(i), F.A.C., provides:

A deed to a trustee from a grantor who has the power to
revoke the trust instrument, and a deed back to the grantor
from the trustee upon revocation of the trust, are not
transfers of ownership subject to the stamp tax.

Rule 12B-4.014(5), F.A.C., provides:

A deed from an agent to his principal conveying real estate
purchased for and with funds of the principal is not
taxable.

Conclusion

The Declaration of Trust clearly provides that the
intention of the parties is to have the bare trustee hold title
for the benefit of the taxpayers. It also reflects that the
acquisition of the property was made with the taxpayers' funds.
This evidences the apparent creation of an "agent to principal"
relationship between the parties. In this case, the deed from
the bare trustee to the taxpayer will not be subject to 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,

Celestine Grantham
Senior Tax Specialist
Technical Assistance and Dispute Resolution
Office of General Counsel

CG/mh