The Florida Documentary Stamp Tax is an excise tax that is enforced on certain documents that are executed, delivered, or recorded in the state. An excise tax is an indirect tax charged by the government on the sale of a particular good or service.
What is the Rate of the Florida Documentary Stamp Tax?
With the exception of Miami-Dade, all Florida counties impose a tax rate of 70 cents on each $100 or portion thereof of the total consideration. Miami-Dade County’s tax rate is 60 cents on each $100 or portion thereof of the total consideration.
How is the Florida Documentary Stamp Tax Paid?
Tax is paid to the Clerk of Courts when documents subject to tax are recorded. When a taxable document is not recorded, then tax payment must be done directly to the Florida Department of Revenue.
What Documents are Subject to the Florida Documentary Stamp Tax?
- Documents that transfer an interest in Florida real property such as deeds;
- Mortgages and promissory notes;
- Certificate of Title;
- A document that transfers an easement; and others.
See Rule 12B-4.013, Florida Administrative Code, for additional documents subject to tax.
Do You Need to Pay Documentary Stamp Tax for an Unsecured Loan Agreement and/or Unsecured Promissory Note That Are Not Recorded? Are There Any exceptions?
The documentary stamp tax law in Florida provides different exemptions. Most mortgages, liens, and deeds are subject to the Florida Documentary Stamp. However, if the note is not secured by a mortgage that is recorded in Florida, then it will not be subject to a documentary stamp tax only if the note, loan agreement, and other loan documents have been made and executed by the borrower outside the state of Florida. These notes also have to have been physically delivered to the lender outside the state of Florida.
Is a Personal Guarantee Subject to the Florida Documentary Stamp Tax?
In Florida, personal guarantees are not subject to documentary stamp tax. In Department of Revenue v. Sun Bank, the court decided the issue of whether a first supplemental indenture of mortgage and deed of trust is considered a “mortgage” as defined in Florida statute and therefore subject to documentary stamp tax. The court, while citing other appeal courts in the state, explained that a contract of guarantee is the promise to answer for the payment of some debt or the performance of some obligation by another on the default of that third person. Therefore, the liability of a guarantor is secondary and is setoff only by the happening of the prearranged condition. To put it another way, a guarantor enters into a cumulative collateral agreement by which he agrees that his principal is capable to, and will perform, a contract the principal has entered into, or is about to make, and that if he defaults the guarantor will, upon being notified, pay the resulting damages. Other courts have also held that documentary tax is not due on contingent or conditional obligations to pay.