Are you liable for the documentary stamp tax?

Documentary Stamp Tax Liability

Who Pays the Documentary Stamp Tax?

In Florida, people who transfer real estate in exchange for value must pay a transfer fee, called a “documentary stamp tax,” on the documents used. The Florida documentary stamp tax has broad applicability, applying to deeds, instruments, or writings whereby lands, tenements, real property, or interests therein are granted or transferred to the purchaser or any other person by his or her direction.[1]

How Much is the Documentary Stamp Tax?

The rate is 70 cents per $100 paid for the property, except in Miami Dade County where the rate is 60 cents instead.[1]

Mortgages and Other Consideration.

Applicability of the stamp tax is not limited to property purchased outright with cash. The tax is also imposed on other value given in exchange for the property including the discharge of an obligation and the amount given for any mortgage or other encumbrance, whether or not the mortgage or underlying indebtedness is assumed.

Florida Documentary Stamp Tax Exemptions.

Except in limited circumstances, Florida’s documentary stamp tax applies to transfers or conveyances of homestead property or any interest in the homestead. One exception is the transfer or conveyance of homestead property between spouses. Where the homestead transferred or conveyed is to one’s spouse and the only thing received in exchange is the amount of a mortgage or other lien encumbering the homestead property at the time of transfer, the documentary stamp tax does not apply.

The homestead exemption incentivizes individuals to invest in real property by reducing the taxable value of real property.[1] The homestead exemption is not automatic.[2] To receive the exemption, a homeowner who  has  legal or beneficial title to real property in Florida and who makes the property his or her permanent residence may file for the exemption with the Property Appraiser in the county in which the property is located.[3] Importantly, the homestead must be owned by the individual applying for the exemption; the homestead exemption does not apply to property held by businesses (such as an LLC).[4]

If you would like to learn more about the documentary stamp tax or other tax issues, don’t hesitate to contact one of our experienced lawyers at EPGD Business Law, located in beautiful Coral Gables, Washington D.C., or West Palm Beach, FL. Call us at (786) 837-6629 or email us to schedule a consultation.

 

[1] FLA Stat. §201.02 1(a).

[1] FLA Admin. Code. §12B-4.012.

[1] FLA Stat. §196.031

[1] Overview of Qualifying and Applying for a Homestead Exemption (Feb. 14, 2019). https://www.sc-pa.com/homestead/overview/. Sarasota County Property Appraiser.

[1] FLA Stat. §196.031

[1] Id.


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