How did Florida treat a cooperative apartment interest in the estate of a Maryland resident?

Plain-English summary

The estate of a Maryland resident held an interest in a Florida cooperative apartment and asked whether that interest was real property or personal property and how Florida's 2006 tax provisions applied.

Florida characterized the cooperative interest as personal property represented by stock rather than direct ownership of the underlying real estate. Stock inseparable from the housing unit was not annually taxed under the cited intangible-tax provisions.

Because Maryland exempted personal property in a nonresident's estate when the home state provided reciprocal relief, Florida provided a like estate-tax exemption for the Maryland resident's Florida cooperative interest. A document later conveying the cooperative occupancy interest remained subject to documentary stamp tax based on any consideration.

What this means for you

This is a historical ruling under Florida's 2006 estate- and intangible-tax laws. It separated ownership of cooperative stock from the real estate and applied a state-to-state reciprocity rule.

Common questions

Was the cooperative interest real property? No. Florida treated the tenant-stockholder's interest as personal property represented by stock.

Why did the Maryland estate receive an exemption? Maryland had a reciprocal nonresident-personal-property exemption, so Florida extended like treatment.

Could a later transfer document be taxed? Yes. Documentary stamp tax could apply based on consideration for conveying the cooperative interest.

Citations and references

• Fla. Stat. §§ 198.02 and 198.44 (2006 estate-tax treatment and reciprocity)
• Fla. Stat. § 199.023 (2006 intangible-property definition)
• Fla. Stat. § 201.02(2) (cooperative occupancy rights)
• Fla. Admin. Code r. 12B-4.013(11) (cooperative units)
• Downey v. Surf Club Apartments, Inc., 667 So. 2d 414 (Fla. 1st DCA 1996)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 06C3-001

Original ruling text

SUMMARY

QUESTION: How will a Florida cooperative apartment/unit be treated for tax purposes in the estate of a Maryland
resident?
ANSWER - Based on Facts Below: Since Maryland has a statute exempting from its estate tax the ownership of
personal property of a nonresident, Florida provides a like exemption from the Florida estate tax for the ownership of
Florida personal property in the estate of a nonresident, including a cooperative apartment/unit.

January 5, 2006

Re: Technical Assistance Advisement No. 06C3-001
Florida Estate Tax-Cooperatives Held in Estate at Death
Sections 198.02, 198.44, 199.023, 201.02(2), F.S.
Rule 12B-4.013(11), F.S.
Dear :
This is in response to your request for a technical assistance advisement asking for an opinion regarding the
characterization of an interest in a cooperative apartment/unit located in Florida, as to whether it is considered an
intangible or real property when held in the estate of a Maryland decedent.
FACTS AS PRESENTED BY PETITIONER
The estate of a Maryland resident contains an interest in a cooperative apartment/unit located in Florida.
There are questions as to how this element in the estate is to be treated for certain tax purposes: intangible
personal property taxes, and estate taxes, and any other related tax situation.
There is an exemption (regarding estate tax) under Maryland law (Maryland Code Annotated, Tax-Gen. s. 7-303
(2004):
(a) Except as provided in subsection (b) of this section, the Maryland estate tax does not apply to the transfer of
personal property in an estate of a nonresident decedent, if, at the time of death, the decedent is a resident of a state
or foreign country whose law, when the personal property is transferred:
(1) does not impose death taxes on the transfer of similar personal property of a resident of this State; or
(2) contains a reciprocal exemption from death taxes similar to the exemption allowed under this subsection.

(b) The exemption under subsection (a) of this section does not include a transfer of tangible personal property that
has a taxable situs in this State.
REQUESTED RULING

1. How should an interest in a cooperative apartment/unit be characterized, as intangible personal property, or as
   real property?
2. How does Florida tax this asset under its estate tax law for a Florida resident decedent?
3. How does Florida estate tax law characterize an interest in a cooperative apartment/unit (in which the underlying
   realty is in Florida) that was held by a Maryland resident decedent? (Maryland has a reciprocal state death statute as
   stated above under the Maryland Code Annotated, Tax-Gen s. 7-303 (2004) that corresponds to Florida Statute
   [Subsection] 198.44(2) (2004).)
4. Are there any additional circumstances regarding the ownership of a cooperative apartment/unit in Florida that
   would affect the taxability in Florida for a Maryland resident decedent?
   LAW AND DISCUSSION
   In regard to question 1 above, as clarified in Downey v. Surf Club Apartments, Inc., 667 So.2d 414 (Fla. 1st DCA
   1996), an ownership interest in a corporation or cooperative is an interest in personal property, not real property. An
   interest in a corporation or cooperative is represented by the ownership of stock in the corporation. Black's Law
   Dictionary (6th ed.) defines "intangible property" as such property as has no intrinsic and marketable value, but is
   merely the representative or evidence of value of stock, bonds, and franchises. This is consistent with the definition in
   s. 199.023(1)(c), F.S., which defines intangible personal property as including all condominium and cooperative
   apartment leases of recreation facilities, land leases, and leases of other commonly used facilities.
   The tenant-stockholder owns the intangible (stock) in the cooperative. He does not own directly the real property
   therein, which is represented by that stock. Stock in a cooperative association where the ownership of the stock and
   the ownership of the housing unit cannot be separated is not subject to the annual intangible tax under Chapter 199,
   F.S.
   In response to question 2, an intangible in the estate of a Florida resident decedent is taxed as an intangible
   included in the estate personal property under s. 198.02, F.S.
   In addition, regarding question 3, s. 198.44, F.S., provides an exemption from the Florida estate tax (Chapter 198,
   F.S.) on intangible property owned by a nonresident of Florida if the state of residence of the decedent has a
   reciprocal law exempting from estate tax the property owned by a Florida resident.
   As to question 4, Florida documentary stamp tax applies to instruments that convey to a new party an interest in
   realty or in a Florida cooperative. The current rate is $.70 per $100 of the consideration for the conveyance (except in
   Miami-Dade County, which has a different rate). Section 201.02, F.S., provides in part:

201.02 Tax on deeds and other instruments relating to real property or interests in real property.(1) 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 or her 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 any 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.
(2) The tax imposed by subsection (1) shall also be payable upon documents by which the right is granted to a tenantstockholder to occupy an apartment in a building owned by a cooperative apartment corporation or in a dwelling on
real property owned by any other form of cooperative association as defined in s. 719.103....
DETERMINATION
Intangible Tax:
The ownership of stock in a cooperative apartment association owned by a Florida resident is not taxed annually
as intangible personal property where the ownership of the stock and the ownership of the housing unit cannot be
separated. The Florida annual intangible personal property tax does not apply to persons who are not residents of
Florida.
Estate Tax:
Where the State of Maryland has a statute exempting from its estate tax the ownership of personal property of a
nonresident, Florida provides a like exemption from the Florida estate tax for the ownership of Florida personal
property in the estate of a nonresident.
Documentary Stamp Tax:
A deed or document conveying an interest in a cooperative unit in Florida would bear a documentary stamp tax
computed on the consideration, if any, for the conveyance. A DR-219 form is required to record the deed in Florida.
The Tax Law Library may be located on the internet address www.myflorida.com/dor/.
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,
M. E. Clemens, C.P.A.
Senior Tax Specialist
Technical Assistance and Dispute Resolution
MEC/mh
Record ID: 15278