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How are Florida “transfer taxes” and “intangible tax” calculated when purchasing a home?

January 12th, 2018 by Sean Stephens

How does a homebuyer calculate Florida “transfer taxes” and “intangible tax”?

When buying a home it is critical to understand what out-of-pocket costs may be due at closing and because the State of Florida can assess certain taxes on both the transfer of real property and mortgages, today’s video will help explain and better understand how these costs are calculated.

Remember, if you need help or a have question that is what we are here for, so just call or email to discuss your scenario because we are known for returning calls, replying to emails, and responding to your messages.

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As a starting point, let’s review what the documentary stamp tax is per the Florida Department of Revenue:

“Documentary stamp tax is an excise tax imposed on certain documents executed, delivered, or recorded in Florida. The most common examples are:

  • documents that transfer an interest in Florida real property, such as deeds; and
  • written obligations to pay money, such as promissory notes and mortgages.

Tax is paid to the Clerk of Court when the document is recorded. When a taxable document is not recorded, the tax must be paid directly to the Florida Department of Revenue.” (Chapter 201, Florida Statutes)

“Deeds and other documents that transfer an interest in Florida real property are subject to documentary stamp tax”.

So, what are the calculations?

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Documentary Stamp Tax on the deed transferring real property would be calculated by taking 70 cents for each $100 or fractional part. (Florida Statute §Section 201.02(1)(a))

Please note that the tax rate of .70 cents is applicable in all counties except Miami-Dade

Additionally, a promissory note is the document which details the amount owed, interest rate, and the terms of your promise to repay which the state will assess a tax of $.35 cents per $100 of the face value of any promissory note.  (Florida Statue § 201.08(1)(b))

 

Unfortunately, we are not done yet, because there is also a one-time nonrecurring tax commonly referred to as “intangible tax” which is calculated at 2 mills per each dollar amount of the note ($.002) secured by the mortgage. (§199.133, Fla. Stat.)

Now, these are a lot of statutes and terms, so let’s just review a quick example to help better understand:

Brenda as the buyer and Steve as the seller have agreed to the purchase and sale of a property located in Highlands County for $125,000.  After Steve’s down payment of $25,000, he obtained a promissory note for $100,000 secured by a mortgage.

Here, because the sales price is $125,000, the Florida Documentary Stamp Tax calculation on the deed would be:

$125,000 X .0070 = $875.00 (1,250 taxable units X $.70)

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Further, because there is also a promissory note which was secured by a mortgage in the amount of $100,000 this would be calculated as follows:

 

 

Further, because there is also a promissory note which was secured by a mortgage in the amount of $100,000 this would be calculated as follows:

  • $100,000 X .0035 = $350 (Promissory Note)
  • $100,000 X .0020 = $200 (“Intangible Tax” for the Mortgage )

Thus, creating a total potential tax charge of $1,425 on this transaction.

While local customs may factor into who traditionally pays for certain charges, remember that the terms of the sales contract will usually determine who is responsible for each specific cost.

Remember that a buyer’s closing costs in Florida may vary from transaction to transaction and if you have any further questions please contact the Florida Department of Revenue for additional clarification.

 

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