Is documentary stamp tax due on a deed placing partnership property held in the partners' names into the partnership's LLP name?

Plain-English summary

The Florida Department of Revenue concluded that documentary stamp tax would not be due on a proposed deed placing Florida real estate into the record name of a limited liability partnership, provided the stated ownership facts were true.

The two individuals had to have formed the general partnership before buying the property, used partnership assets for the purchase, and treated the property as a partnership asset continuously through the proposed deed. Florida law presumes property bought with partnership assets is partnership property even when title was taken in the partners' individual names.

The later conversion from a general partnership to a limited liability partnership did not create a different entity or change beneficial ownership. On those facts, the deed established record title rather than transferring a real-property interest to a new owner.

What this means for you

Partnerships correcting record title

A deed into the partnership's registered LLP name may avoid documentary stamp tax when the evidence shows the partnership already owned the property beneficially from the original purchase.

Transaction teams

Keep records showing when the partnership was formed, the source of purchase funds, partnership tax-return treatment, and continuous treatment of the property as a partnership asset.

Common questions

Q: Did registering or converting to an LLP create a new beneficial owner?
A: No. Under the cited conversion statute, the organization remained the same entity and its property remained vested without reversion or impairment.

Q: Was the result unconditional?
A: No. It depended on the partnership existing before the purchase, using partnership assets, and continuously treating the real estate as partnership property.

Citations and references

• Fla. Stat. §§ 201.02(1)(a), 620.8204(3), 620.8915, and 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 14B4-002

Original ruling text

Executive Director
Marshall Stranburg

QUESTION: FOR PURPOSES OF ESTABLISHING RECORD TITLE TO FLORIDA REAL
PROPERTY, IS DOCUMENTARY STAMP TAX DUE ON A DEED THAT TRANSFERS
PARTNERSHIP PROPERTY FROM INDIVIDUALS, ACTING AS A PARTNERSHIP, TO THEIR
LIMITED LIABILITY PARTNERSHIP?
ANSWER: IF THE INDIVIDUALS FORMED A PARTNERSHIP PRIOR TO THE PURCHASE OF
THE PROPERTY, THE PROPERTY WAS PURCHASED WITH PARTNERSHIP ASSETS, AND THE
PROPERTY WAS TREATED AS PARTNERSHIP PROPERTY FROM THE TIME THE
INDIVIDUALS PURCHASED THE PROPERTY UNTIL THE PROPOSED DEED IS EXECUTED,
THEN NO TAX WOULD BE DUE ON THE PROPOSED DEED.
February 19, 2014
Re:

Technical Assistance Advisement No. 14B4-002
Documentary Stamp Tax - Transfer of real property from Individuals to a Limited Liability
Partnership
Sections 201.02(l)(a), 620.8204(3), 620.8915, Florida Statutes (F.S.)
XXX (Taxpayers)
XXX (LLP)

Dear XXX:
This is in response to your request dated XXX, for a Technical Assistance Advisement (TAA) pursuant to
s. 213.22, F.S., and Rule 12-11, Florida Administrative Code (F.A.C.), regarding whether documentary
stamp tax is due on a proposed deed purporting to transfer encumbered Florida real property from the
Taxpayers to LLP, which is wholly and equally owned by the Taxpayers. An examination of your letter
has established that you have complied with the statutory and regulatory requirements for issuance of a
TAA. Therefore, the Department is hereby granting your request for a TAA.
FACTS AS PRESENTED BY PRACTITIONER
On XXX, the Taxpayers purchased Florida real property located in XXX County, Florida. On XXX, the
Taxpayers registered with the Florida Secretary of State as a general partnership and on XXX, converted
to a limited liability partnership. The XXX County property was treated as partnership property from the
start, partnership federal tax returns were filed, and the “partners” reported income and expenses in
proportion to their respective ownership interests.
Child Support Enforcement – Ann Coffin, Director  General Tax Administration – Maria Johnson, Director
Property Tax Oversight – James McAdams, Director  Information Services – Damu Kuttikrishnan, Director

www.myflorida.com/dor
Tallahassee, Florida 32399-0100

Technical Assistance Advisement 14B4-002
Page 2

The documents presented for examination are as follows:

1. Corporate Warranty Deed recorded XXX, in Official Records of XXX County Book/Page XXX.
2. Partnership Registration Statement filed XXX, with the Florida Secretary of State.
3. Statement of Qualification for Florida Limited Liability Partnership filed XXX, with the Florida
   Secretary of State.
4. Mortgage recorded XXX, XXX County Official Records Book/Page XXX.
5. Proposed Warranty Deed.
6. Application for Registration of Fictitious Name.
7. Federal Tax Returns (Form 1065) for the years XXX.
   REQUESTED RULING
   You requested that the Department confirm that documentary stamp tax would not be due on the proposed
   deed purporting to transfer Florida real property from the Taxpayers, acting as a partnership, to LLP,
   because the proposed deed will not transfer an interest in Florida real property.
   LAW AND DISCUSSION
   Section 201.02(1)(a), F.S., imposes documentary stamp tax “on deeds, instruments, or writings whereby
   any lands, tenements, or other real property, or any interest therein, shall be granted, assigned, transferred,
   or otherwise transferred to, or vested in, the purchaser or any other person by his or her direction.” The
   tax rate is 70 cents on each $100 of the consideration or portion thereof, for the property interest
   transferred. “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.” Where
   property other than money is exchanged for interests in real property, there is the presumption that the
   consideration is equal to the fair market value of the real property interest being transferred.
   Section 620.8204(3), F.S., states that property is presumed to be partnership property if purchased with
   partnership assets, even if not acquired in the name of the partnership or of one or more partners with an
   indication in the instrument transferring title to the property of the person’s capacity as a partner or of the
   existence of a partnership.
   Section 620.8915, F.S., titled "Effect of Conversion," provides in part:
   (l) An organization that has been converted pursuant to this act is for all purposes the same entity
   that existed before the conversion.
   (2) When a conversion takes effect:
   (a) Title to all real estate and other property, or any interest therein, owned by the converting
   organization at the time of its conversion remains vested in the converted organization without
   reversion or impairment under this act….

Technical Assistance Advisement 14B4-002
Page 3

The Taxpayers purchased the subject property at the end of XXX and began filing federal partnership tax
returns in XXX. The property was included as an asset in the federal partnership tax returns. If the
property was presumed to be partnership property, then the conversion from a general partnership to a
limited liability partnership would have no effect on the beneficial ownership of the property, as LLP was
for all purposes the general partnership that existed before the conversion, and the property would be
vested in LLP without reversion or impairment as of the date of the conversion (s. 620.8915, F.S.).
DEPARTMENT’S POSITION
As to the requested advisement, documentary stamp tax will not be due on the proposed deed, as long as
the Taxpayers formed the general partnership prior to the purchase of the property, the property was
purchased with partnership assets, and the property has been treated as an asset of the partnership from the
time the Taxpayers acquired the property until the proposed deed is executed.
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 documents are public records under
Chapter 119, F.S., which are subject to disclosure to the public under the conditions of s. 213.22, F.S.
Your name, address, and any other details, which might lead to identification of the taxpayer, must be
deleted before disclosure. In an effort to protect the confidentiality of such information, we request you
provide the undersigned with an edited copy of your request for Technical Assistance Advisement, backup
material and response within fifteen days of the date of this advisement.
Sincerely,

Henry Small
Tax Law Specialist
Technical Assistance and Dispute Resolution
HJS/tlf
Record ID: 143507