Did transferring real property to a Florida land-trust trustee owe only minimum documentary stamp tax when the transferor kept all beneficial ownership?

Plain-English summary

A developer owned condominium units, timeshare interests, and other real property in Florida and other states. To create a multi-site timeshare plan, it proposed a Florida land trust. It would deed property to the trustee for no consideration, but the trust documents made the developer the immediate, sole, and exclusive owner of every beneficial interest placed in the trust.

Florida held that each conveyance from the developer to the trustee—both the initial transfer and later additions—was subject only to the $0.70 minimum documentary stamp tax. Rule 12B-4.013 taxes a trustee deed only to the extent it transfers beneficial ownership for consideration. Here, legal title moved to the trustee, but the developer's beneficial ownership did not change.

The rule applied whether or not the property was encumbered by a mortgage. A deed from an owner to a trustee is exempt to the extent the owner retains the same beneficial interest as trust beneficiary.

After creating the trust, the developer planned to sell recorded timeshare interests that represented beneficial interests in the trust. This advisement addressed the developer-to-trustee conveyances, not the documentary stamp tax on those later customer sales.

What this means for you

Legal title and beneficial ownership are separate

Putting a trustee's name on the deed does not necessarily transfer the economic ownership that Florida uses for this tax analysis. The key fact was that the transferor remained the only beneficial owner.

No consideration supported minimum-tax treatment

The developer gave the property to the trustee without payment or other consideration, and no other beneficiary acquired an interest at that stage.

Mortgages did not change this result

Rule 12B-4.013(29)(a) expressly applies the retained-beneficial-ownership exemption whether or not the real property is mortgaged.

Later sales require their own analysis

When purchasers later acquire beneficial timeshare interests, ownership does change. The ruling describes that plan but does not state the tax due on those transactions.

Common questions

Q: How much deed tax applied when the developer transferred property to the trustee?
A: The $0.70 minimum documentary stamp tax on each conveyance under the facts presented.

Q: Why wasn't the mortgage balance taxed?
A: The governing rule exempts the deed to the extent the grantor retains beneficial ownership, whether or not the property is encumbered.

Q: Did the trustee become the economic owner?
A: No. The trust documents vested all beneficial ownership immediately and exclusively in the developer.

Q: Did the ruling exempt later timeshare sales?
A: It did not decide them. It ruled only on property deeds from the developer to the trustee.

Citations and references

• Fla. Stat. § 201.02(4) (transfers of beneficial interests in real property)
• Fla. Stat. § 689.071 (Florida land trusts)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)
• Fla. Admin. Code r. 12B-4.013(29)(a) (no change in beneficial ownership on deed to trustee)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 09B4-002

Original ruling text

SUMMARY
QUESTION: Whether the transfer of property from the Taxpayer to the Trustee is subject to
only the minimum tax because there is no change in beneficial ownership.
ANSWER: Yes, because there is no change in beneficial ownership, the transfer from the
Taxpayer to the Trustee is subject only to minimum tax.
January 13, 2009
Re:

Technical Assistance Advisement No. 09B4-002
Documentary Stamp Tax - Sale and Purchase of Beneficial Interest in Trust
Sections 201.02(4), F.S.
Rule 12B-4.013(29), F.A.C.
XXX (hereinafter Taxpayer)

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
Taxpayer owns certain real property in Florida and other states. The property consists of
condominiums and other real property interests. Taxpayer intends to create a multi-site
timeshare plan. The Taxpayer will also be the developer of the plan.
In connection with the creation of the timeshare plan, the Taxpayer intends to establish a
Florida land trust under Section 689.071, F.S., by executing a trust agreement setting forth the
terms of the trust. A Memorandum of Trust Agreement will be recorded in the Public Records
of XXX, Florida, evidencing the existence and certain aspects of the trust and trust agreement.
In accordance with the provisions of the proposed trust agreement and in accordance with the
deeds to be recorded from time to time and any other instruments of conveyance, all beneficial
ownership in all property conveyed to the Trustee of the trust will immediately and automatically
vest with the Taxpayer. Therefore, the Taxpayer will initially be the sole and exclusive owner of
all beneficial interest in the property placed in the trust. The property will be conveyed to the
Trustee for no consideration. At the time of conveyance, the property will consist of whole
ownership condominium units, timeshare condominium interests, and other real property
interests, and it will be delivered to the Trustee by a deed of conveyance, which will be recorded
in the appropriate county where the property is located.

Page 2
The Taxpayer, as developer of the timeshare plan and initial owner of the property
interests, will subject the property to the timeshare plan and sell timeshare interests (each of
which is a beneficial interest in the trust). The purchase and sale of the timeshare interests will
be effectuated by a deed of a beneficial interest in the trust. The deed will be recorded in the
Public Records of XXX, Florida. The Purchaser of the timeshare interest becomes an owner of a
beneficial interest in the trust and is entitled to use and occupy the property in accordance with
the timeshare plan.
Each owner of a beneficial interest in the trust is entitled to finance his or her purchase by
encumbering the beneficial interest in the trust with a mortgage that is recorded in the Public
Records of XXX, Florida. Each mortgage granted by the owner of the beneficial interest in the
trust attaches to the beneficial interest in the real property but does not encumber the Trustee’s
title to the underlying property.
Request for Advisement
You request that the Department issue a Technical Assistance Advisement to confirm
that each conveyance of property from the Taxpayer to the Trustee (including the initial
conveyance of property to the trust and subsequent conveyance of additional property to the
Trustee as described in the previously stated facts) is subject only to the seventy cents ($.70)
minimum Florida Documentary Stamp Tax, because there is no change in beneficial ownership
of the property when conveyed from the Taxpayer to the Trustee.
Provisions of Law and Discussion
Section 201.02(4), F.S., imposes tax on deeds or other instruments that transfer or convey
beneficial interests in lands, tenements or other real property or interests in real property. Tax is
computed at a rate of $.70 per $100 of the consideration or fractional part thereof of the
consideration.
Regarding a deed to or from a Trustee, Rule 12B-4.013(29), F.A.C., provides that
property is taxable to the extent the deed transfers the beneficial ownership of the real property
and to the extent there is consideration. Rule 12B-4.013(29)(a), F.A.C., provides that a deed
from X to the Trustee is exempt to the extent of X’s beneficial ownership interest as a trust
beneficiary. The deed is exempt from tax whether or not the property is encumbered by a
mortgage.
Position of the Department
It is the position of the Department that each conveyance of property from the Taxpayer
to the Trustee (including the initial conveyance of property to the Trust and subsequent
conveyance of additional property to the Trustee as described in the previously stated facts) will
be subject only to the seventy cents ($.70) minimum Florida Documentary Stamp Tax when
conveyed from the Taxpayer to the Trustee.

Page 3
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 Turner
Tax Law Specialist
Technical Assistance and Dispute Resolution
CG/mh
Record ID: 49071