The Florida Documentary Stamp Tax is a both buyer and seller closing cost in the state of Florida. The Florida Documentary Stamp Tax is levied both on deeds, customarily paid by sellers, as well as on mortgages, typically paid by buyers.
For sellers, the Florida Documentary Stamp Tax rate is 0.7% of the total consideration in all Florida counties except Miami-Dade. In Miami-Dade county, the tax rate is 0.6% on single-family home sales and 1.05% on anything else. The Florida Documentary Stamp Tax is the Florida equivalent of NYC and NYS Transfer Taxes.
For buyers, the Florida Documentary Stamp Tax rate is 0.35% of the mortgage loan amount. Someone buying a $2,000,000 home in Miami with a $1,600,000 mortgage will pay 0.35% x $1,600,000 or $5,600 in stamp tax. The Florida Documentary Stamp Tax is effectively Florida’s version of the NYC Mortgage Recording Tax.
The Florida Documentary Stamp Tax is authorized under Florida Statutes, Chapter 201: Excise Tax on Documents.
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Florida Documentary Stamp Tax FAQ:
How much is the Florida Documentary Stamp Tax for sellers?
For Florida sellers outside of Miami-Dade county, the Florida Documentary Stamp Tax rate is 0.7% (i.e. $.70 per $100 or portion thereof) of the total consideration paid, or to be paid, for the transfer.
There are two tax rates for sellers within Miami-Dade county:
0.6% on single-family homes
1.05% on all other property types
In order to calculate the Florida Documentary Stamp Tax, be sure to round up the sale price to the nearest $100 prior to multiplying by the applicable tax rate.
For example, let’s say you’re selling a single-family home in Miami-Dade County and the sale price is $500,051. Rounding up to the nearest 100 gives us $500,100.
We would then multiply $500,100 by the applicable tax rate of 0.6%, which gives us a Florida Documentary Stamp Tax amount of $3,000.60.
According to the Florida Department of Revenue, consideration generally consists of:
Money paid or to be paid
Discharge of an obligation
Mortgage or other lien encumbering the property
Exchange of property
Any other monetary consideration or consideration which has value
Moreover, “when the consideration paid or exchanged for real property is property other than money, the consideration is equal to the fair market value of the real property.”
For example, let’s say you exchange a vacant plot of land in Broward County which is worth $105,000 for a car. The taxable consideration for this non-monetary transfer is fair market value of the land ($105,000).
In addition to the Florida Documentary Stamp Tax, Florida home buyers who are financing must also pay the Florida Nonrecurring Intangible Tax.
What types of transactions does the Florida Documentary Stamp Tax apply to?
The Florida Documentary Stamp Tax applies to deeds, bonds, notes and other written obligations to pay as well as mortgages, liens and other evidences of indebtedness.
The Florida Documentary Stamp Tax is payable on all of the following transfers of interest in real property:
Quit claim deeds
Contracts for timber, gas, oil, or mineral rights
Contracts or agreements for deed
Assignments of contract or agreement for deed
Assignments of leasehold interest
Assignments of beneficial interest in a trust
Deeds in lieu of foreclosure
Who pays the Florida Documentary Stamp Tax?
Sellers are typically responsible for paying the Florida Documentary Stamp Tax on the deed, while buyers who are financing usually foot the stamp tax bill on the mortgage itself.
Who pays specific closing costs is outlined in Section 9 of the standard “AS IS” Residential Contract for Sale and Purchase approved by the Florida Realtors and the Florida Bar, which is a commonly used contract for Florida real estate transactions:
Notwithstanding the norms outlined above, a buyer and seller can negotiate who is responsible for paying the Florida Documentary Stamp Tax if both parties are so inclined.
In the case of new construction, it’s not uncommon for the developer to ask the purchaser to cover the stamp tax.
How to avoid the Florida Documentary Stamp Tax
One way to reduce the Florida Documentary Stamp Tax as a seller is to apportion some amount of the purchase price to any personal belongings such as furniture which may be included as part of the sale.
Let’s say you’re selling a $2,000,000 home in Martin County. You are selling the home with approximately $100,000 of furniture. In this case, you could consider reducing the purchase price to $1,900,000. This would reduce the stamp tax by $700 (0.7% of $100,000).
However, there are several risks to this strategy which may not make it worthwhile. First and foremost, your buyer’s lender may have an issue with the lower contract price since it will increase the loan-to-value ratio on the loan. There’s no point in trying to save $700 if it results in your buyer being unable to obtain financing.
In addition, you will likely need to have the furniture professionally appraised in order to have a defensible paper trial in the event that the Florida Department of Revenue starts asking questions. The cost of the appraisal will likely match or exceed the amount of savings derived from the strategy in the first place.
There are also a handful of exemptions to the Florida Documentary Stamp Tax. Both marital transfers of homestead property and the transfer of a marital home as a part of a divorce are both exempt from stamp tax.
In addition, the following entities do not have to pay the stamp tax in Florida:
US government agencies
Florida government agencies
Florida counties, municipalities and political subdivisions