Did an entity merger trigger deed tax or new mortgage documentary stamp and intangible taxes?

Plain-English summary

An entity owning two mortgaged Florida housing communities planned to merge into a newly formed Florida LLC, with the LLC surviving. Florida merger law vested the disappearing entity's property and liabilities in the survivor automatically, without a deed.

Florida found no documentary stamp tax on the title transfer because it occurred by operation of law. The existing mortgage also produced no new documentary stamp or nonrecurring intangible tax merely because of the merger.

The mortgage debt remained the same, and the statutory transfer did not create the type of renewal or additional obligation described in the ruling.

What this means for you

This historical ruling distinguished an automatic statutory merger from a separately documented conveyance or mortgage renewal. The exact merger law and any change to debt terms remain critical.

Common questions

Was a deed needed to transfer the real estate? No. Title vested automatically in the surviving LLC under the cited merger statute.

Did the existing mortgage create new tax? No. The Department found the merger caused no additional documentary stamp or intangible tax on the existing mortgage.

Would changing the debt terms matter? The ruling cited renewal rules covering changes such as added obligors, principal, interest, maturity, or payment terms.

Citations and references

• Fla. Stat. § 199.145(3) (2006 nonrecurring intangible-tax rule for assumed obligations)
• Fla. Stat. §§ 201.02 and 201.08 (deed and mortgage documentary stamp taxes)
• Fla. Stat. § 608.4383(2)-(3) (property and liabilities vest in a surviving merger entity)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 06M-002

Original ruling text

SUMMARY
QUESTION: Upon a merger, will documentary stamp tax be due on the transfer of title or will the existing mortgage be
subject to documentary stamp and intangible taxes?
ANSWER: Documentary stamp tax will not be imposed on the transfer of title nor will documentary stamp and
intangible taxes be imposed on the existing mortgage as a result of a merger by operation of law.

April 7, 2006

Re: Technical Assistance Advisement No. 06M-002
Intangible Tax and Documentary Stamp Tax
Mergers and Consolidations
Sections 199.145(3), 201.02, 608.4383, 620.201, and 620.04, F.S.
XXX (hereinafter Taxpayer)
XXX (hereinafter "Property")
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 Taxpayer currently owns title to two housing communities in Florida. Pursuant to Florida law, the Taxpayer
desires to merge with a "to be formed" Florida LLC. The "to be formed" LLC will be the surviving entity after the
merger. The Florida merger statute, section 608.4383, F.S., provides that real property owned by the "disappearing
entity" in a merger vests automatically in the surviving Florida limited liability company without the necessity of
recording a deed. The Property is encumbered by a mortgage and will remain encumbered by a mortgage at the time
of the merger of the Taxpayer with the "to be formed" Florida LLC.
Request for Advisement
The Taxpayer requests a determination whether the proposed merger of the Taxpayer, with the "to be formed"
Florida LLC, the surviving entity, will require documentary stamp tax on the transfer of title under the merger.
A determination is also requested whether documentary stamp and intangible taxes will be due on the existing
mortgage once the merger is complete and the certificate of merger is recorded in the appropriate county.
Provisions of 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 or
her direction, on each $100 of the consideration therefore 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.
Pursuant to s. 201.08(1), F.S., a mortgage or other evidences of indebtedness and each renewal of the same is
subject to tax at $.35 per $100 at the time it is filed or recorded in this state. As it pertains to renewals, s. 201.08(5),
F.S., provides in part:
For purposes of this section, a renewal shall only include modifications of an original document which change the
terms of the indebtedness evidenced by the original document by adding one or more obligors, increasing the
principal balance, or changing the interest rate, maturity date, or payment terms....
Section 608.4383 (2), F.S., states:
The title to all real estate and other property, or any interest therein, owned by each domestic limited liability company
and other business entity that is a party to the merger is vested in the surviving entity without reversion or impairment
by reason of this chapter.
Section 608.4383(3), F.S., provides:
The surviving entity shall thereafter be responsible and liable for all the liabilities and obligations of each limited liability
company and other business entity that is a party to the merger, including liabilities arising out of the appraisal rights
under ss. 608.4351-608.43595 with respect to such merger under applicable law.
Section 199.145(3), F.S., provides
No additional nonrecurring tax shall be due upon the assumption of a note, bond, or other obligation for the payment
of money if a nonrecurring tax has previously been paid and the amount of the indebtedness remains the same,
whether or not the original obligor is released from liability.
Position of the Department
When property transfers by operation of Florida law, documentary stamp tax will not be required on the transfer of

title under the merger. Furthermore, no documentary stamp or intangible taxes will be due on the existing mortgage as
a result of the merger under Florida law.
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
CG/mh
Record ID: 18681