The Florida Documentary Stamp Tax is a tax on the transfer of real property or taking out a mortgage. Some people call it a tax on buying a house, but whether the buyer or seller pays is negotiable.
What is the Documentary Stamp Tax rate?
The tax depends on the amount of consideration given for the transaction. This will usually be the purchase price. There is a separate rate for notes and mortgages (discussed further down in this post).
The normal tax rate is $0.70 for each $100 of consideration or portion thereof. (Section 201.02(1)(a), Florida Statutes (F.S.)) For example, if there is $110 in consideration, the tax is $1.40.
In Miami-Dade County, the state tax rate is reduced to $0.60 per $100 but there is also a surtax of $0.45 per $100. (Section 201.031, Florida Statutes) The surtax does not apply to the transfer of a single-family residence.
The tax is based on where the document is filed. That would generally be where the home is located. For example, if you buy a home in Orange County, you would file the deed and pay tax in Orange County. It doesn’t matter if both the buyer and seller live or complete the transaction somewhere else.
What is consideration?
Consideration is anything of value given in exchange for something else. Examples include:
- Money paid now or later
- Discharging a promissory note or other financial obligation
- Other real property
- Personal property
- A mortgage, lien, or other encumberance on the property
If consideration isn’t cash, you generally use the fair market value. For example, if you buy a house for $100,000 in cash and another house worth $100,000, the consideration is $200,000.
If the buyer assumes a mortgage or other loan, the amount of that loan is added to consideration. That’s because the seller gets something of value by no longer having to pay that debt. For example, if you buy a house for $100,000 in cash and assume a $300,000 loan, the consideration is $400,000.
Who pays the Documentary Stamp Tax?
All parties listed on the document are liable for the Documentary Stamp Tax. The parties should agree on who pays as part of the transaction.
If one part is exempt from the tax, the other must pay it.
What documents are subject to documentary stamp taxes?
The documents subject to documentary stamp taxes typically include the following. (Rule 12B-4.013, Florida Administrative Code)
- Warranty deeds
- Special warranty deeds
- Quit claim deeds
- Trustee’s deed
- Life estate deed
- Certain documents that transfer property between spouses
- Agreements or contracts for deeds
- A document that transfers a mobile home as real property
- An assignment of a leasehold interest in real property
- Certificate of Title
- A document that transfers a cemetery lot or interment rights
- A deed in lieu of foreclosure
- A document that transfers an easement
- Contracts for timber, oil, gas, or mineral rights
The following documents don’t usually create a taxable transaction. (Rule 12B-4.014, Florida Administrative Code)
- Transfers between a principal and agent when the agent used the principal’s funds to buy the property.
- Marriage deeds
- Divorce deeds
- Transfers under threat of eminent domain or condemnation
- A personal representative’s deed given pursuant to a duly probated will
Florida does not have a specific exemption for estate planning purposes. While you can use an available exemption for estate planning, you should be aware that some estate planning moves may be subject to tax. Ask your estate planning lawyer how this affects your options.
What’s the Florida Documentary Stamp Tax rate for mortgages?
There is a $0.35 per $100 documentary tax stap on promissory notes and other written obligations to pay money.((Section 201.08, Florida Statutes))
Tax is due on the amount of the obligation. For a note or other written obligation to pay money, the maximum tax is $2,450. For mortgages, liens, security agreements, and other evidences of indebtedness, there is no cap on the tax.
Documents that extend or continue an existing obligation without changes are generally exempt from tax.((Section 201.09(1), Florida Statutes))
If you are buying a home using a mortgage, check with your mortgage lender for how they handle this tax. They may include it in your closing costs as a separate line item or combined with other fees.
Can you use an LLC to avoid the Documentary Stamp Tax?
Some people have previously placed a property under an LLC then sold the LLC in an attempt to avoid taxes. The thinking is that it’s a transfer of a business rather than a transfer of real property.
In many situations, Florida law closes this loophole and imposes the Documentary Stamp Tax even if the property owner on paper (the LLC) doesn’t change.
When there’s a change in control of non-homestead property, even if it stays under the same LLC, you may also be required to notify the property appraiser and potentially have your property taxes reassessed.
There are many situations where it may be beneficial to form an LLC for tax or legal reasons. You’ll generally want to talk to a lawyer before doing so.
What other taxes are there on an exchange of property?
If you buy a property using a mortgage, you may need to pay the Florida Intangible Tax. All buyers and sellers will need to reconcile Florida Property Taxes.
If you’re buying a home as your primary residence, don’t forget to review the Florida Homestead Exemption. If you’re buying a rental property, see Florida Rental Property Taxes.