UPDATED december 2023
Transferring a Property to an LLC? Think Twice Before Doing So!
In Florida, property tax assessments cannot increase more than 10% annually, except for the school board part of the tax rate. Upon a “change of ownership or control” of the property, however, the 10% assessment limitation cap is removed and the assessed value resets to market value. In defining a “change of ownership or control” the statute excludes conveyances that merely transfer title between legal and equitable title.
A recent Third District Court of Appeal case addressed whether a transfer from individuals to an LLC, wholly owned by those same individuals and where no monetary consideration was exchanged, constitutes a “change of ownership or control” which requires removal of the 10% assessment limitation cap or if it falls withing the exception for a transfer between legal and equitable title, allowing the cap to remain in place.
The court held that the transfer was a change of ownership or control because the LLC is a distinct and separate entity from its individual members. The court mentioned that the point of the transfer was to separate the individuals from their ownership of the property to absolve them of tort liability for occurrences on the property. Finally, the quitclaim deed employed to transfer the property from the individuals to the LLC, by law divested the individuals of any interest in the deeded property with such interest vesting in the LLC. Thus, as a result, the 10% assessment limitation cap was removed, resulting in a sizable tax increase.
Dan Wolfe and Julie Schwartz
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)