Florida real estate law includes doc stamps — here's what that means
Doc stamps are taxes. In Florida, these taxes are most commonly levied on real estate transfer documents, mortgages, and other promissory notes.
Responsibility for this tax varies by district. In Florida, all parties are legally liable for the stamp, unless one party is otherwise exempt. The seller traditionally pays the tax on the deed, and the buyer covers the stamp if engaging in a mortgage.
However, not all real estate transactions qualify for the tax. For example, exchanges made due to divorce—if they meet the exemption criteria—are typically not held liable for the doc stamp.
Deed doc stamps
Whenever there's a transfer of the interest in real estate, as with a deed, the state of Florida collects a doc stamp. Miami-Dade County is taxed at 60 cents for every $100, whereas the remainder of the state is subject to a 70 cent per $100 rate. However, Miami-Dade residents aren't getting away with as much as it might seem—the county charges an additional surtax of 45 cents on every $100 unless the transfer is a single-family dwelling.
In general, but not exclusively, the following real estate transactions garner a doc stamp:
- Whenever money is paid or intended to be paid in a real estate transaction
- If a property is exchanged
- Upon engaging in a mortgage, lien, or attachment to the property
The transfer of a property with a mortgage will be taxed on the balance of the mortgage at the time of transfer if the mortgage remains and no more than the amount of the mortgage was paid. When a property is under foreclosure, the tax is calculated based on the price the property sold for at auction.
Mortgage and promissory note doc stamps
Any written obligation to pay will have a documentary stamp act. The tax is derived based on the total amount of the obligation at 35 cents on every $100, regardless of whether it's a promissory note, lien, security agreement, or mortgage.
Fortunately, in this case, there's a $2,450 cap on taxes levied on promissory notes or other written agreements to pay. However, this cap does not apply to mortgages, liens, security agreements, or other documents establishing indebtedness. Tax rates for this group are calculated based on the total amount secured by the mortgage or lien, whether contingent or absolute.
Liability for doc stamps on mortgages and promissory notes falls on all parties involved, even if one party agrees to pay. In cases where one party is exempt from the tax, the non-exempt party is required to pay for the stamp.
To help clarify, here are some examples of agreements subject to mortgage and promissory note doc stamps:
- Collateral assignments of a lease
- Deed agreements or contracts
- Assumptions of mortgages
- Mortgages that secure lines of credit
- Mortgages that secure a guarantee
- Mortgages that secure a letter of credit
- Mortgages that secure a bail bond
Don't rush into buying without knowing what to expect
Purchasing real estate is exciting, but it can be full of surprises – some good and some not so good. Regardless of which side of the table you're on, it's always best to go into any real estate transaction prepared.
Because of the unique real estate market in Florida, the laws governing such transactions are different than other parts of the country. It's always smart to consult with a real estate attorney before signing any paperwork.
If you're looking to buy or sell real estate in Florida, we encourage you to take a look at our blog, “4 Disclosures Every Florida Real Estate Seller Must Make”. Contact us if you have any questions about buying real estate in Florida.