In Florida, the documentary stamp tax is a tax excised on certain documents that are executed, delivered, or recorded. The documentary stamp tax primarily applies to real estate and financial documents. Documents that require the documentary stamp tax include deeds, bonds, promissory notes, mortgages, or liens. Upon recording of the document, the documentary stamp tax is paid to the county clerk of court. If the document is not recorded, then the tax is paid to the Florida Department of Revenue. Like all taxes, the purpose of the documentary stamp tax is to collect revenue.
How to Calculate the Documentary Stamp Tax:
The price of the documentary stamp tax varies based on the type of document. For instance, the documentary stamp tax rate for real estate deeds is $.70 per $100, rounded up, based on the total purchase price. For instance, if you purchase a property for $300,000, the tax would be $2,100 ($300,000 / $100 x $0.70).
However, there is an exception for properties in Miami-Dade County. For single-family residences in Miami-Dade County, the documentary stamp tax rate is $.60 per $100. For other properties in Miami-Dade County, the tax rate is $.60 plus $.45 surtax per $100.
For mortgages, the documentary stamp tax rate is $.35 per $100, rounded up, based on the amount financed. As an example, a $200,000 mortgage would incur a tax of $700 ($200,000 / $100 x $0.35). Additionally, many online county websites provide calculators which allow you to input the purchase price and loan amount in order to determine the documentary stamp tax for the buyers and sellers of real estate.
For bonds, the documentary stamp tax rate is $.35 per $100 based on the face value of the bond. The tax can be paid via a secure web application or a paper Documentary Stamp Tax Return for Registered Taxpayers’ Unrecorded Documents (Form DR-225). Additionally, taxpayers who paid $20,000 or more in documentary stamp tax during the most recent fiscal year must pay electronically in the following year.
Who is Responsible for Paying the Documentary Stamp Tax
In most real estate transactions, the seller typically pays the documentary stamp tax on the deed, while the borrower usually pays the tax on the mortgage. However, the terms can be negotiated between the parties involved. It’s important to clarify these details in the contract with both parties involved and a lawyer to avoid any surprises.
Who is Exempt from Paying the Documentary Stamp Tax?
The documentary stamp tax does not apply when property is transferred between spouses, often as part of divorce settlements or for estate planning. Additionally, transactions involving government entities or certain tax-exempt organizations may also be exempt. Some tax-exempt government entities include United States government agencies, Florida government agencies, Florida’s counties, municipalities, and political subdivisions. If a party is exempt from the documentary stamp tax, then the tax is still required to be paid by the non-exempt party.
Be Proactive!
The documentary stamp tax is an integral part of the real estate and financial landscape in Florida. Whether you’re buying a new home, refinancing a mortgage, or executing other financial documents, understanding this tax can help you better manage your financial obligations and avoid potential issues during your transactions. It is essential that the tax is paid promptly and in full to avoid any penalties for issues with recording and to avoid interest for over or underpayment. Additionally, filing protocols, tax rates, and legislative changes vary by county and state. Thus, it is always a good idea to consult with a real estate or tax attorney to ensure that you’re fully informed and compliant with all applicable regulations.
