What Is Florida’s Transfer Tax (Documentary Stamp Tax)?
Navigate Florida's transfer tax, officially known as the Documentary Stamp Tax. This guide simplifies its application, calculation, and payment for property and financial dealings.
A transfer tax is a levy imposed by a state or local government on the transfer of ownership of property or certain financial instruments. It serves as a revenue-generating mechanism for the taxing authority, often funding public services or infrastructure projects. While the concept of a transfer tax is common, its specific application, rates, and terminology vary significantly by jurisdiction. In Florida, this type of levy is primarily known as the “documentary stamp tax.” It is an excise tax assessed on specific documents or transactions rather than directly on the property or asset itself.
Understanding Florida Documentary Stamp Tax
Florida’s Documentary Stamp Tax, detailed in Chapter 201 of the Florida Statutes, is an excise tax imposed on the privilege of recording certain documents or engaging in specific transactions within the state. This tax is not a direct tax on property ownership but rather on the paperwork that formalizes the transfer or obligation.
The tax primarily applies to two distinct categories of instruments. The first category includes deeds and other documents that convey an interest in Florida real property. The second category encompasses promissory notes, mortgages, liens, and other written obligations to pay money.
Transactions Subject to the Tax
The documentary stamp tax applies to a wide range of transactions, particularly those involving real property transfers and financial obligations. For real property, the tax is generally imposed on documents like warranty deeds, quitclaim deeds, and special warranty deeds, which convey an interest in real estate. The tax is triggered when consideration is exchanged for the transfer of property, and it can also apply to assignments of leasehold interests. Consideration includes money paid, obligations discharged, or existing mortgages and liens on the property.
Common exemptions exist for certain transactions. These include transfers of homestead property between spouses where the only consideration is an existing mortgage, and transfers of property between spouses or former spouses due to a dissolution of marriage. Gifts where no consideration is involved typically incur a nominal tax.
For financial obligations, the tax applies to promissory notes, written agreements to pay money, and mortgages. The tax is due on the original issuance of these instruments. Examples include demand notes, term notes, retail installment contracts, and certain renewal notes. Mortgages and other liens are taxable when filed or recorded in Florida, with the tax based on the full amount of the indebtedness secured.
Calculating the Tax Amount
Calculating the documentary stamp tax depends on the type of transaction and the value involved. For deeds and other documents transferring interests in real property, the general tax rate across most Florida counties is $0.70 for each $100, or fraction thereof, of the total consideration. This consideration encompasses the total value exchanged, including any money paid, obligations discharged, or existing mortgages and liens on the property. For example, a property transfer with $200,000 in consideration would incur a tax of $1,400.
Miami-Dade County has a slightly different rate structure. For deeds in Miami-Dade, the rate is $0.60 per $100, or portion thereof, of consideration. Additionally, Miami-Dade County imposes a surtax of $0.45 per $100, or portion thereof, of consideration, though this surtax does not apply to documents transferring only a single-family dwelling. A non-single-family dwelling transfer in Miami-Dade County would face a combined rate of $1.05 per $100 of consideration.
For promissory notes and other written obligations to pay money, the tax rate is $0.35 for each $100, or fraction thereof, of the indebtedness evidenced by the document. This tax is capped at a maximum of $2,450 for notes and other written obligations to pay money. For instance, a $50,000 promissory note would incur a tax of $175. Mortgages are also taxed at $0.35 per $100 of the secured amount, but there is no maximum cap on the documentary stamp tax due for recorded mortgages or liens.
Recording and Payment Process
The process for recording and paying the documentary stamp tax is generally straightforward, typically handled during the document recording. While Florida law states that all parties to a document are liable for the tax, in real estate transactions, the responsibility for payment is often negotiated between the parties, with the seller commonly paying the tax on deeds. If one party is exempt, such as a government entity, the non-exempt party is responsible for paying the tax.
The tax is due at the time the document is executed or delivered. For most real property transfers, the tax is collected when the document, such as a deed or mortgage, is presented for recording at the county Clerk of the Circuit Court’s office. The Clerk’s office collects the tax and ensures the proper amount is paid before the document is officially recorded.
Once collected, the Clerks of Court remit the funds to the Florida Department of Revenue. The tax is generally paid by affixing physical or digital stamps to the document, signifying that the required tax has been satisfied. If a taxable document is not recorded, the tax must be paid directly to the Florida Department of Revenue.