Was documentary stamp tax due when an owner deeded mortgaged property to a trust for which he was sole beneficiary?

Plain-English summary

No documentary stamp tax was due on the proposed deed to the trustee. The same individual owned the Florida mobile-home park before the transfer and would be the trust's sole beneficiary afterward, so beneficial ownership did not change.

The existing mortgage did not alter the exemption under Rule 12B-4.013(32)(a). The Department expressly limited the conclusion to a nonbusiness trust; it did not apply the rule to a Chapter 609 business trust.

What this means for you

A mortgage normally can count as consideration, but this specific no-change-in-beneficial-ownership rule covered both encumbered and unencumbered property when the grantor and sole beneficiary were identical.

Common questions

Q: Did the property have to be debt-free? No. The mobile-home park could remain subject to its mortgage.

Q: Would the same rule cover a trust with additional beneficiaries? This ruling did not decide that situation; it relied on the owner being the sole beneficiary.

Q: Did the exemption apply to a business trust? No. The ruling excluded a business trust under Chapter 609.

Citations and references

• Fla. Stat. § 201.02(1) — documentary stamp tax and consideration
• Fla. Admin. Code r. 12B-4.013(32)(a) — no change in beneficial ownership
• Fla. Stat. ch. 609 — business-trust exclusion noted in the ruling
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 02B4-008

Original ruling text

SUMMARY

QUESTION: Is documentary stamp tax due on a conveyance of
real property from the owner of the property to the trustee
of a trust of which the owner is the sole beneficiary?

ANSWER - Based on Facts Below: Based on Facts Below. No, a
deed transferring property to a trustee of a trust (except
for a business trust under Chapter 609, F.S.) where the
grantor and beneficiary are identical is not subject to
documentary stamp tax, regardless of whether a mortgage
encumbers the property.

Nov 15, 2002

Re: Technical Assistance Advisement No. 02B4-008
Documentary Stamp Tax
Conveyance of Real Property from Trustee
Section 201.02(1), F.S.
Rule 12B-4.013(32)(a), F.A.C.
XXX (Taxpayer)
XXX (Property)

Dear :

This is in response to your request for a Technical
Assistance Advisement dated October 15, 2002, as to the
taxability of a conveyance of Property from Taxpayer to the
trustee of a trust of which Taxpayer is sole beneficiary.

Facts Presented by the Petitioner

Taxpayer currently owns title in his personal name to a
mobile home park in Florida, operated as Property. Taxpayer
desires to convey Property to the trustee of a trust in which
Taxpayer is sole beneficiary. The Property is encumbered by a
mortgage and will remain encumbered by said mortgage at time of
conveyance. The Trust Agreement, when drafted, will show

Taxpayer as the sole beneficiary of the Trust.

Requested Ruling

Taxpayer requests a determination that the proposed
conveyance of Property shall be exempt from documentary stamp
tax under s. 201.02, F.S., and Rule 12B-4.013(32)(a), F.A.C.

Law and Discussion

Section 201.02(1), F.S., provides:

On deeds, instruments, or writings 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 direction, on each $100 of the consideration
therefor the tax shall be 70 cents. When the full amount
of the consideration for the execution, assignment,
transfer, or conveyance is not shown in the face of such
deed, instrument, document, or writing, the tax shall be at
the rate of 70 cents for each $100 or fractional part
thereof of the consideration therefor. For purposes of this
section, consideration includes, but is not limited to, the
money paid or agreed to be paid; the discharge of an
obligation; and the amount of any mortgage, purchase money
mortgage lien, or other encumbrance, whether or not the
underlying indebtedness is assumed. If the consideration
paid or given in exchange for real property or interest
therein includes property other than money, it is presumed
that the consideration is equal to the fair market value of
the real property or interest therein.

Rule 12B-4.013(32)(a), F.A.C., titled "No Change in
Beneficial Ownership," states:

A deed from X to a trustee is exempt from the stamp tax to
the extent of X's beneficial ownership interest as a trust
beneficiary, whether or not the real property is encumbered
by a mortgage. For example, if X owns encumbered or
unencumbered real property and conveys it to the trustee of

a trust of which X is the sole beneficiary, the conveyance
is exempt from the stamp tax.

Under these provisions of law, a deed transferring property
to a trustee of a trust where the grantor and beneficiary are
identical is not subject to documentary stamp tax, regardless of
whether a mortgage encumbers the property. This does not apply
to a business trust under Chapter 609, F.S.

Department's Position

Based upon the above cited statute and rule, it is the
Department's position that the conveyance of Property from
Taxpayer to a trustee of a Trust of which taxpayer is sole
beneficiary is not subject to documentary stamp 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, your request
and related backup documents are public records under Chapter
119, F.S., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

Sincerely,

Joy. B. Eldred, CPA
Tax Law Specialist
Technical Assistance and Dispute Resolution
Office of the General Counsel

JBE/mh