What Are Transfer Taxes in Florida & Who Pays Them?
Understand Florida's property transfer taxes. Get insights into their purpose, calculation, responsibility, and applicable exemptions.
Transfer taxes in Florida are state assessments applied to the transfer of property interests, primarily real estate. These taxes contribute to state revenue and are typically collected when property transaction documents are recorded.
Types of Florida Transfer Taxes
Florida imposes three main types of transfer taxes on various documents. The documentary stamp tax on deeds applies to instruments that transfer an interest in real property. This includes warranty deeds, quitclaim deeds, assignments of leasehold interests, and deeds executed in lieu of foreclosure. This tax is levied on the total consideration paid or to be paid for the transfer.
The documentary stamp tax on mortgages, liens, and other evidences of indebtedness is imposed when a mortgage, lien, or other security agreement is filed or recorded in Florida. It is based on the full amount of the indebtedness secured by the instrument.
The nonrecurring intangible personal property tax on notes applies to promissory notes and other written obligations to pay money. This specific tax must be secured by a mortgage on real property located in Florida. This tax is a one-time assessment on the value of the obligation.
Calculating Florida Transfer Taxes
Calculating Florida’s transfer taxes involves applying specific rates to the consideration or secured amount of the transaction. For the documentary stamp tax on deeds, the general rate across most Florida counties is $0.70 for each $100, or portion thereof, of the total consideration. Consideration includes not only money paid, but also the discharge of an obligation, the value of exchanged property, or any mortgage or lien encumbering the property. For example, a property sale in a typical county for $300,000 would incur a documentary stamp tax of $2,100 ($300,000 / $100 x $0.70).
Miami-Dade County has a different rate for the documentary stamp tax on deeds. For single-family residences, the rate is $0.60 per $100 of consideration. For other properties, Miami-Dade County assesses $0.60 per $100 plus an additional $0.45 surtax per $100. A non-single-family dwelling in Miami-Dade County sold for $500,000 would result in a documentary stamp tax of $3,000 ($500,000 / $100 x $0.60) plus a surtax of $2,250 ($500,000 / $100 x $0.45), totaling $5,250.
The documentary stamp tax on mortgages, liens, and other evidences of indebtedness is calculated at a rate of $0.35 for each $100, or portion thereof, of the indebtedness secured by the document. There is no maximum limit on this tax. For instance, a $200,000 mortgage would incur a documentary stamp tax of $700 ($200,000 / $100 x $0.35).
The nonrecurring intangible personal property tax on notes is calculated at 2 mills, which translates to $0.002 for each dollar of the note amount secured by a Florida mortgage. For a promissory note of $100,000 secured by a mortgage, the intangible tax would be $200 ($100,000 x $0.002).
Who Pays Florida Transfer Taxes
The responsibility for paying Florida transfer taxes generally follows customary practices, though the parties can negotiate these terms in their sales contract. For the documentary stamp tax on deeds, the seller traditionally pays this tax. However, the purchase agreement can specify otherwise.
The documentary stamp tax on mortgages and the nonrecurring intangible personal property tax on notes are typically paid by the borrower, often the buyer in a real estate transaction. This obligation is commonly passed on to the borrower as part of closing costs. Parties should clearly define who is responsible for each specific tax within the closing documents or sales contract to avoid misunderstandings.
Exemptions from Florida Transfer Taxes
Certain transactions and situations may qualify for exemptions from Florida transfer taxes. Transfers of real property between spouses or former spouses are typically exempt if they occur incident to a divorce or dissolution of marriage. Documents transferring property to or from United States government agencies, Florida government agencies, and Florida’s counties, municipalities, or political subdivisions are also exempt from documentary stamp tax.
Transfers made to correct errors in previously recorded deeds, where there is only nominal consideration, generally do not incur additional documentary stamp tax. Certain transfers to trusts or other entities where there is no actual change in beneficial ownership and no outstanding mortgage may also be exempt. Genuine gifts of property where no consideration is exchanged are also typically exempt, provided there is no existing mortgage on the property.
For the nonrecurring intangible personal property tax, specific exemptions exist. These include loans provided by government agencies, mortgages related to industrial purposes, or those secured by an aircraft lien. Refinancing a mortgage with the same lender where the obligation remains unchanged, and loans for veterans holding a VA home loan certificate of eligibility, can also qualify for exemption.