Was a quitclaim deed transferring county-bank development rights to a developer subject to Florida documentary stamp tax?

Plain-English summary

Florida did not impose documentary stamp tax because the deed transferred development rights without itself conveying land or an interest in real property.

The county acquired environmentally sensitive land and placed allowable development units in a bank. Developers could purchase units, which were deducted from the bank and applied to a site-specific development order. The quitclaim deed proved payment and acquisition of the units.

Florida characterized the rights as similar to zoning or land-use permissions that controlled development capacity. Because the instrument did not itself convey a real-property interest, section 201.02(1) did not apply.

What this means for you

The substance of the right transferred matters more than the document's deed label. Programs should document whether an instrument transfers only regulatory development capacity or also conveys a property interest.

Common questions

Q: Did recording a quitclaim deed make it taxable?
A: No. The deed label and recordation did not change what it conveyed.

Q: What did the developer receive?
A: Development-right units applied to a specified site's development order.

Q: Did the ruling cover a deed conveying land or an easement?
A: No. Its answer depended on no real-property interest being conveyed.

Citations and references

• Fla. Stat. § 201.02(1) — documentary stamp tax on real-property conveyances
• Fla. Admin. Code r. 12B-4.013(5) — provision cited in the ruling
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 03B4-007

Original ruling text

SUMMARY

QUESTION: The issue is whether a deed conveying development
rights is subject to tax.

ANSWER - Based on Facts Below: No. A deed, which conveys
development rights and does not in itself convey an
interest in real property is not subject to tax.

Jul 14, 2003

Re: Technical Assistance Advisement No. 03B4-007
Documentary Stamp Tax - Development Program
Section 201.02(1), F.S.; Rule 12B-4.013(5), F.A.C.
XXX (hereinafter County)
XXX (hereinafter Developer)

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.

Facts as Presented by Petitioner

The County, in an effort to preserve environmentally
sensitive land, has developed a Transfer of Development Rights
("TDR") program whereby the County acquires fee simple title to
environmentally sensitive lands, inclusive of all TDR units
permissible by the County's Comprehensive Plan. The units are
then placed in the so called "TDR bank". Developers may request
permission from the County to buy the TDR units from the bank.
The TDR units are then deducted from the bank and applied to the
developer's site specific development order. The County then
uses the funds to purchase other environmentally sensitive
lands. The quit-claim deed is the proof from the County that

the TDR units have been acquired from the bank and that the
County has been paid for these units.

The development rights are allocated to specific real
property, the legal description of which is attached to the
Deed. The development rights conveyed by deed are most similar
to rights under applicable land use or zoning provisions, in
that they dictate the ability to develop upon the particular
parcel of property described above. The Developer plans to
build single family homes on such property. Because of the
manner in which the environmentally sensitive lands program is
being administered in the County, these development rights are
conveyed by quit-claim deed, rather than in a manner that zoning
or land use rights are generally conferred by the County (by
resolution of the Board of County Commissioners).

Request for Advisement

You request an Technical Assistance Advisement stating that
taxes are not due in connection with the conveyance of the
development rights to the Developer pursuant to the Deed.

Provisions of Law

Section 201.02(1), F.S., imposes tax on deeds which convey
lands, tenements, or other real property or an interest in real
property. For purposes of s. 201.02(1), F.S., consideration
includes, but is not limited to, 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 on
the property at the time of conveyance.

A review of the deed indicates that it is a conveyance of
Development Rights units that were held in the County Transfer
of Development Rights bank. Critical to this issue is that the
developer already owns the land at the time of the purchase of
the development rights by deed. The Special Density Program
under the County's zoning district describes the Deed of
Transfer of Development Rights as a legal document which
transfers the ownership of specified development rights from one
parcel of land to another, and which is recorded in the Public

Records of the County.

Position of the Department

The deed, which represents a conveyance of development
rights and does not in itself convey an interest in real
property, is not subject to the 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,

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

CG/mh