Current through Reg. 50, No. 187; September 24, 2024
(1)
(a)
Scope. This rule applies to transfers of an ownership interest in a conduit
entity to which real property was transferred without tax paid on the full
consideration for the property.
(b)
Definitions. For purposes of this rule:
1.
"Conduit entity" means a legal entity, or its successor entity, to which real
property is transferred without full consideration by a grantor who owns a
direct or indirect interest in the entity.
2. "Full consideration" means the
consideration that would be paid in an arm's length transaction between
unrelated parties, which would be the consideration as provided in Section
201.02(1)(a),
F.S., but an amount not less than the fair market value of the real
property.
(2)
When there is a transfer of an ownership interest in a conduit entity for
consideration within 3 years after a transfer of real property to the conduit
entity, the transfer of such ownership interest is subject to tax if the
conduit entity continues to own property that would cause the entity to be
considered a conduit entity.
(3)
The tax is based on the consideration paid or given for the ownership interest
in the conduit entity, which includes the amount of any mortgage attached to
real property that was transferred to the conduit entity. If the conduit entity
owns assets other than the real property referred to in subsection (2), tax is
calculated by multiplying the consideration for the interest in the conduit
entity by the tax rate and then multiplying the result by a fraction, the
numerator of which is the value of the real property referred to in subsection
(2) and the denominator of which is the value of all assets owned by the
conduit entity.
(4) A gift of an
ownership interest in a conduit entity is not subject to tax to the extent
there is no consideration.
(5) The
transfer of shares or similar equity interests that are dealt in or traded on
public, regulated security exchanges is not subject to the tax.
(6)
(a) If
an instrument is filed or recorded in Florida by the 20th day of the month
following the month the ownership interest is transferred, the tax must be
remitted at the time of the filing or recording. If an instrument is not filed
or recorded by the 20th day of the month following the month the ownership
interest is transferred, the tax is due to the Department on or before the 20th
day of the month following the ownership transfer. The tax must be reported on
a Documentary Stamp Tax Return for Nonregistered Taxpayers' Unrecorded
Documents (Form DR-228, incorporated by reference in Rule
12B-4.003, F.A.C.).
(b) When the 20th day falls on a Saturday,
Sunday, or legal holiday, payments accompanied with returns will be accepted as
timely if postmarked on the next succeeding day which is not a Saturday,
Sunday, or legal holiday. For purposes of this rule, a "legal holiday" means a
holiday that is observed by federal or state agencies as a legal holiday as
this term is defined in Chapter 683, F.S., and section
7503 of the Internal Revenue Code
of 1986, as amended. A "legal holiday" pursuant to section
7503 of the Internal Revenue Code
of 1986, as amended, means a legal holiday in the District of Columbia or a
statewide legal holiday at a location outside the District of Columbia but
within an Internal Revenue district.
(7) The provisions of this rule do not affect
the imposition of tax on transactions described in Section
201.02(4),
F.S., on documents which convey or transfer, pursuant to Section
689.071, F.S., any beneficial
interest in lands, tenements, or other real property.
(8) The discretionary surtax imposed under
Section 201.031, F.S., applies to
taxable transfers under Section
201.02(1)(b),
F.S., and this rule.
(9) Examples.
(a) Example 1: On July 2, 2009, Lloyd
transferred Orange County, Florida real property (the real property), owned by
him alone, to a limited liability company (LLC) he owned alone. No documentary
stamp tax was paid on the document that transferred the real property to the
LLC. On July 3, 2009, Lloyd transferred his interest in the LLC for $1, 000,
000. The LLC owned no assets other than the real property. Documentary stamp
tax of $7, 000 was due on the transfer of Lloyd's ownership interest in the LLC
based on the $1, 000, 000 consideration, since tax was not paid on the full
consideration when the real property was transferred to the LLC.
(b) Example 2: On July 2, 2009, Calvin and
Sally transferred Duval County, Florida real property (the real property),
which they owned equally, to a limited liability company (LLC) owned equally by
Calvin and Sally. The full consideration at the time of the transfer was $30,
000. Documentary stamp tax of $210 was paid on the document that transferred
the real property to the LLC. On July 10, 2009, Calvin and Sally sold their
ownership interests in the LLC. No documentary stamp tax was due on the
transfer of Calvin's and Sally's ownership interests in the LLC, since no
"conduit entity" was created pursuant to Section 201.02(1)(b)1.a., F.S., and
this rule, since tax was paid on the full consideration for the real property
when it was transferred to the LLC.
(c) Example 3: On July 2, 2009, Vern and
Carol transferred Miami-Dade County, Florida commercial real property (the real
property), which they owned equally, to a limited liability company (LLC) owned
equally by Vern and Carol. No documentary stamp tax was paid on the document
that transferred the real property to the LLC. On July 10, 2009, Vern sold his
interest in the LLC for $200, 000. The LLC owned no assets other than the real
property. Tax of $1400 and discretionary surtax of $900 were due on the
transfer of Vern's ownership interest in the LLC, since tax was not paid on the
full consideration for the real property when it was transferred to the
LLC.
(d) Example 4: On July 2,
2009, Pam and Mike transferred Walton County, Florida real property (the real
property), which they owned equally, to a corporation. The corporation was
owned equally by Mike and a limited liability company (LLC) owned by Pam alone.
No documentary stamp tax was paid on the document that transferred the real
property to the corporation. On July 10, 2009, Pam sold her interest in the LLC
(thereby selling her indirect ownership interest in the corporation) for $45,
000. The corporation owned assets in addition to the real property transferred
to it on July 2, 2009. The value of the real property was $85, 000, and the
real property made up 95% of the value of all assets owned by the corporation.
The only asset owned by the LLC was its interest in the corporation. Tax of
$299.25 (450 x $.70 x 95%) was due on the transfer of Pam's ownership interest,
since tax was not paid on the full consideration for the real property when it
was transferred to the corporation.
(e) Example 5: On July 2, 2009, Tom
transferred Broward County, Florida real property (the real property), owned by
him alone, to a limited liability company (LLC) he owned alone. No documentary
stamp tax was paid on the document that transferred the real property to the
LLC. On July 10, 2009, Tom sold 50% of his interest in the LLC to Imogene for
$200, 000. The LLC owned no assets other than the real property. Tax of $1, 400
was due on the transfer of Tom's 50% ownership interest in the LLC based on
consideration of $200, 000, since documentary stamp tax was not paid on the
full consideration for the real property when it was transferred to the LLC. On
July 25, 2009, Tom sold one-half of his remaining 50% ownership interest in the
LLC for $105, 000, and Imogene sold one-half of her 50% ownership interest in
the LLC for $105, 000. Tax of $735 was due on the transfer of Tom's ownership
interest, since tax was not paid on the full consideration for the real
property when it was transferred to the LLC. No tax was due on Imogene's
transfer, since tax was due and paid on Tom's transfer to Imogene.
(f) Example 6: On July 2, 2009, Sue
transferred Polk County, Florida real property (the real property), owned by
her alone, to a limited liability company (LLC) she owned alone. The real
property was encumbered by a mortgage at the time of the transfer. The mortgage
balance at the time of the transfer was $75, 000, which was an amount less than
the property's fair market value. Documentary stamp tax of $525 was due and
paid on the document that transferred the real property to the LLC based on the
mortgage balance of $75, 000. The LLC owned no assets other than the real
property. On July 31, 2009, Sue sold her interest in the LLC for $110, 000. Tax
of $770 was due on the transfer of Sue's ownership interest in the LLC based on
consideration of $110, 000.
Rulemaking Authority
201.11(1),
213.06(1) FS.
Law Implemented 201.02(1), (4),
201.0201,
201.031
FS
New 4-25-12.
