One of the more positive aspects of residing in the State of Florida is the absence of a state based income tax which directly affects all Florida residents. The revenue, otherwise derived from a state income tax must be achieved in other ways in order for the State to provide essential services and fund the government. One such method is the application of a documentary stamp tax on the purchase or sale of real estate.
The appropriate application of Documentary Stamps is addressed in Chapter 201, Florida Statutes. Documents subject to the tax include:
- Stocks and bonds
- Notes and written obligations to pay money
- Mortgages, liens, and other evidences of indebtedness
The applicable tax is typically collected by a title and escrow company at the closing of the real property and paid at the time the document is recorded with the county. The rate is $.70 per $100.00 on documents that transfer interest in Florida real property, such as warranty deeds and quit claim deeds. The tax rate on a written obligation to pay money is $.35 for each $100 (or portion thereof) of the obligation evidenced by the document. Who pay the stamps is negotiable but there are certain entities which are exempt including the United States government and governmental agencies; Florida government agencies and Florida’s counties, municipalities and political subdivisions. Do not forget however that if one party is exempt from paying the tax, the non-exempt party must pay.