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Ray
Ray, Lawyer
Category: FL Real Estate
Satisfied Customers: 41063
Experience:  30 years in civil, probate, real estate, elder law
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I own with my brother 2 real estate properties in Florida

Customer Question

I own with my brother 2 real estate properties in Florida (about $150K each). However my brother and I are non US resident and leave in Europe. My brother and I want to transfer these properties to a newly formed LLC, however the LLC members are as follow myself and 2 other brothers ( my other brother who own the property with me is not a member of the LLC). We want to pay the less taxes possible in effectuating these transfer so my plan is to first amend the LLC articles of organization and add my brother that is not a llc member to the LLC and maybe also amend the article of organization to remove my other 2 brothers from the LLC and add them in the future as members in the Operating Agreement. Once this is done I think I can do the transfer of ownership from 2 non resident individuals to a FL LLC with the same non resident individuals as members. At no point in this transaction there is exchange of money for the transfer the properties stays in the family so I believe there is no Firpta involved or gift tax involved besides the documentary stamp taxes on the Quit claim deeds. I would like to know if there will be no taxes?
Submitted: 6 months ago.
Category: FL Real Estate
Expert:  Ray replied 6 months ago.

Hi and welcome to JA. Ray here to help you today.Please bear with me a few moments while I review your question and respond.

Expert:  Ray replied 6 months ago.

Florida has transfer fees here for any deed transfers.

Calculations

Florida documentary tax stamp rates are the same in each county, with the exception of Miami-Dade. The rate is equal to 70 cents per $100 of the deed's consideration. For example if a property is purchased for $200,000, first divide the sales price by $100, then multiply by .70 for a total of $1,400 for documentary tax stamps. Miami-Dade's tax rate is 60 cents. It's customary for the seller of the property to pay for this tax in Florida. Typically, the real estate agent obtains a check for the amount from the seller before the deed is recorded. However, depending on terms of the sales contract, the buyer might cover the tax.

Considerations

A few entities are exempt from paying stamp taxes in Florida. These include government agencies, state agencies, counties and municipalities. Additionally, no tax is charged if the deed is only being changed — such as adding a spouse as an owner. In addition to the stamp tax on deeds, it's also charged on mortgages. The rate implied for mortgage loan balances is 35 cents per $100. Typically the buyer pays this tax. The amount is generally included in the closing costs

These would be the only fees, only capital gains here when you sell the properties.But there is a fee here in Florida on each deed that gets filed and it is collected at time of recording.You can have this done by a local title company.They prepare deeds and file them and charge you for the deed filing fees and recording.

These aren't huge but it is a fee on the paper deed here and a cost of transferring them to the LLC.

I appreciate the chance of helping you today.Thanks again.

If you can positive rate 5 stars it is much appreciated.

Customer: replied 6 months ago.
Ray, thanks for your response but this does not answer my question.
Expert:  Ray replied 6 months ago.

There are no taxes such as capital gains this is strictly a property transfer but there are transfer fees on all real property in Florid.But nothing due here with IRS you aren't selling them but merely transferring from individuals to an entity.Let em know if you have more thanks for letting me clarify this.

I appreciate the chance to help you .

Customer: replied 6 months ago.
Thanks Ray, so should I amend the articles of Incorporation to remove my 2 brothers who are LLC members as of now and add them later or can I do the transaction without removing them and it will still be a mere change of ownership transfer with no FIRPTA taxes or gift tax involved. My issue is FIRPTA since we are non resident and gift tax.
Expert:  Ray replied 6 months ago.

Well you transfer title here to the LLC you can add or take out members of the LLC by amendment when you want to do so.It would have no effect here the transfer is to the LLC and whoever is part of it has an interest.

Thanks again and thanks for rating

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