Quit Claiming Properties into an LLC in Florida
We purchased 3 properties outside of Tampa last year and are just getting around to Quit Claiming into our LLC's. I usually have the title companies do it for free at purchase where we currently invest. When I started the paperwork the Florida Deptartment of Revenue told me I needed to pay all document fees again, as if were being resold. I think I just need to call an attorney to take care of this but wanted to see what some Florida investors may know.
#1 Wholesaling Contributor
- Wholesaler
- Tampa, FL
Yes, definitely get advised by an attorney. I've heard that it could trigger documentary stamp taxes because the transfer is considered a sale for tax purposes. Good luck!
It usually triggers intangible tax, so not uncommon to pay that. We worked with US Deeds in the past and the process was very smooth.
@Amy E Good
Reach out to AMZ title in Tampa. They're investor friendly and will tell it to you straight
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@Amy E Good I just had a customer ask me this same question on a deal. They are buying a property for cash to renovate, but he wants to pull cash out after it's all done and rented for his next project. It was under contract in his personal name, but he planned on transferring later into his LLC. I reminded him that Florida Doc Stamps Tax on a Deed is .007 times the purchase price. You might, however, want to speak with a CPA about transferring it after you own it. I know under certain circumstances they consider an arm's length transfer differently. I do not know the rules on that off the top of my head, but I do know there are some differences sometimes. Good Luck!
In short, in Florida, transferring title from an individual name to an entity will not trigger documentary stamp taxes so long as the transferee entity is 100% owned by the transferor individual and no additional consideration is paid.
This concept was confirmed by the Florida Supreme Court in its decision in Crescent Miami Center LLC vs. Florida Department of Revenue (903 So.2d 913 (Fla. 2005). However, many were abusing the loophole created by the Crescent Miami Center LLC decision by making the title transfer from individual to entity and then immediately just selling the units of the LLC, shares of the corporation, etc. to a third-party in attempt to avoid documentary stamp taxes. So, the Florida legislature closed the loophole somewhat in 2009 with Senate Bill 2430 and revised Fla. Stat. ch. 201.02 to state that any transfer of units of an LLC, shares of a corporation, etc. to a third-party within 3 years of when title was transferred to the entity from an individual (relying on the Crescent Miami Center LLC loophole), was not exempt from documentary stamp taxes.
I am happy to discuss any specific transfer questions if you wish to contact me directly.