Florida Documentary Stamp Tax

Don’t be surprised!

For those of you who may not know, the State of Florida taxes certain documents through their Documentary Stamp Tax.    This tax applies to recorded documents which transfer an interest in real property, including, but not limited to, Warranty and Quitclaim deeds.   This tax is also due on any mortgage, lien or other evidence of indebtedness that may be filed in the State of Florida.

As far as  deeds, the tax is based upon the “total consideration paid” for the transfer.   In this scenario, people mistakenly assume that the term consideration only refers to money paid in exchange for real property.  Consideration can also include the discharge of an obligation or the assumption of debt (i.e. mortgage) on a particular property.  It can be anything of value that is exchanged for the property.  Tax Paid Stamp Shows Excise Or Duty Paid

Parties to a transaction are sometimes surprised to hear that a transfer between family (even a husband and wife!) may be subject to this tax.  Example:  If a newly married couple decide to reside in the wife’s home and desire to add the husband to title on the home via a Quitclaim deed, Documentary Stamp Tax may be due.  If there is a mortgage on the property, the newlyweds will need to pay the Documentary Stamp Tax on half of the outstanding balance of the mortgage on the property.

In the event the Quitclaim deed somehow gets recorded by the county without the appropriate tax payment, the lovebirds are likely to receive an anniversary present from the Florida Department of Revenue in the form of a letter notifying them of an audit, demanding they immediately pay the missed tax payment with penalties and interest.

 

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