In Florida, as in most other US states, those who buy or sell properties much understand and anticipate transfer tax. Let’s break down everything you need to know about the Florida real estate transfer tax, who pays transfer taxes in Florida, and other considerations.
Real Estate Transfer Tax Overview
When a real estate transaction is made, some tax is almost always due to cover the costs associated with transferring the property or deed from one person to another. The new deed of a real estate transaction, for example, will show the new owner’s name and record that the seller legally transferred ownership of the property to the new owner.
Most US states impose a property transfer tax or real estate transfer tax since counties are responsible for recording these changes and updating national records.
Florida’s Documentary Stamp Tax
Florida is no exception to the above national trend. The only difference is that Florida calls its real estate transfer tax the “documentary stamp tax”. This tax can apply to a wide variety of properties, including:
- Warranty deeds
- Quitclaim deeds
- Contracts for rights to mine certain natural resources
- Deeds in lieu of foreclosure
- Assignments of leasehold interest, beneficial interest in a trust, or contract or agreement for a deed
Florida also requires the documentary stamp tax to be presented when the deed is shown to the county clerk to be filed on record. In a practical sense, the cost of the tax is due when the deal is officially closed.
How Much is the Real Estate Transfer Tax in Florida?
The Florida real estate transfer tax varies depending on the county. In every county except Miami-Dade, the Florida transfer tax is 0.7% of the purchase price of the home. In Miami-Dade County, the tax rate is 0.6%. Thankfully, calculating the addition of this closing cost to any given real estate deal is easy.
In Florida, every county except for Miami-Dade has the same tax rate: $.70 per $100 of the deed’s total consideration cost. Here’s a basic example:
- A property is purchased for $200,000
- Dividing the initial sale price by $100 makes $2000
- Multiply that price by 0.70 for $.70
- The resulting cost is $1400, which is the documentary stamp tax for that property
However, in Miami-Dade County, the tax rate is $.60 per $100 for the deed’s original price. The same formula as outlined above can be used here to get the requisite tax cost.
Who Pays the Florida Transfer Tax?
Like most closing costs, this is highly negotiable, and the seller may opt to cover the Florida transfer tax in order to make the burden of purchasing real estate easier on the buyer. Indeed, real estate agents often default to assigning the Florida transfer tax cost to the property’s seller in lieu of hearing an objection.
In this case, a real estate agent who facilitated the deal can obtain a check for the tax rate amount from the seller before the deed is recorded at the county clerk’s office. On the other hand, the buyer can present this amount to the real estate agent or bring the tax amount, and the deed, down to the county clerk’s office themselves.
In short: usually, the seller pays for this closing cost. But the buyer can as well, depending on the negotiations and deal specifics.
As mentioned, documentary stamp taxes are typically paid to the property county’s clerk or recorder as soon as the deed is recorded. But suppose the document is recorded after the 20th day of the month. In that case, the tax cost must be paid straight to the Florida Department of Revenue so that the costs can be accurately allocated and tallied for the monthly income ledger for the state.
If payment of the documentary stamp tax is late, whoever is responsible for the payment (usually the seller, but occasionally the buyer) will need to pay:
- 10% of the tax owed per month late up to 50% maximum
- Interest that accrues every year
This rarely occurs, however, as Florida transfer taxes are typically included with usual closing cost considerations.
Mortgage Transfer Taxes
The Florida real estate transfer tax is also charged on mortgage transfers as well as deed transfers. The price can vary slightly, but it’s usually $.35 per $100 for the remaining mortgage cost. This does mean that mortgages with less remaining will incur less of a Florida transfer tax. Mortgages with the majority of their cost still owed to the bank or lending institution will incur heavier taxes.
As with regular real estate transfer taxes, these costs are usually collected as part of the overall closing costs for a mortgage transfer deal. However, the buyer usually pays the mortgage transfer tax in Florida. This is open to negotiation, but it’s often because those selling their mortgages are attempting to get out of the property with as much money as possible to buy another property or downsize.
Are There Any Exemptions to the Documentary Stamp Tax?
Yes, there are some exemptions to the documentary stamp tax, though only a few. Government agencies, county properties, some municipalities, and most state agencies do not have to pay Florida documentary stamp tax when a property is transferred from one owner to the other. This is similar to exemptions in other states throughout the US. Without these exemptions, the government would often essentially pay itself: a waste of time.
Furthermore, no property tax will be charged if your Florida deed is being changed, rather than being transferred. For example, adding a spouse as an owner to a home deed will not result in a transfer tax being levied since no transfer is occurring. This sometimes applies to inheritance transfers, but not usually.
All in all, Florida transfer taxes are relatively easy to understand and account for when calculating the true overall cost of transferring real estate or making a purchase. Remember to add the Florida transfer tax cost to your total by first determining whether you are in Miami-Dade County or another county. And don’t hesitate to ask your realtor or another financial expert for more advice or options. Good luck!