Documentary Stamp Tax
Definition:
The documentary stamp tax is a state tax imposed on certain documents that transfer an interest in property or represent an obligation to pay money. Common examples include deeds, promissory notes, and mortgages. The tax is evidenced by the purchase of “documentary stamps,” which serve as proof that the required tax has been paid.
Documentary Stamp Tax Information
Documentary stamp taxes are typically paid when real estate or financial instruments are executed, delivered, or recorded. The tax amount depends on the type of document and the value of the transaction. For example, when property is sold, the tax is calculated based on the consideration (purchase price or value) stated in the deed. When a promissory note or mortgage is created, the tax is based on the amount of indebtedness secured.
The purpose of the tax is to generate revenue for the state and to provide a record of official transactions involving property and financial obligations.
Florida Legal Definition
In Florida, the **Documentary Stamp Tax** is governed by **Chapter 201 of the Florida Statutes**. The tax applies to deeds, notes, bonds, mortgages, and other written obligations.
– For **deeds**, the rate is generally **$0.70 per $100** (or fraction thereof) of the consideration or value of the property.
– For **promissory notes and written obligations to pay money**, the rate is **$0.35 per $100** of the amount.
– For **mortgages and liens**, the same rate of **$0.35 per $100** applies.
The tax is collected by the clerk of court when deeds are recorded and by the Department of Revenue for other taxable documents. Certain transfers—such as between spouses, to governmental entities, or to certain trusts—may be exempt under specific statutory provisions.
How It’s Used in Practice
In practice, documentary stamp taxes are commonly encountered in real estate transactions, refinancing, and loan agreements. Title companies, attorneys, and lenders typically calculate and remit the tax at closing. Failure to pay the appropriate documentary stamp tax can prevent a deed or mortgage from being recorded and may result in penalties or interest. Legal and financial professionals ensure compliance by verifying tax calculations and applicable exemptions before submission to the clerk or Department of Revenue.
Key Takeaways
- The documentary stamp tax is imposed on documents transferring property or creating obligations to pay money.
- It is paid when deeds, notes, or mortgages are executed, delivered, or recorded.
- In Florida, the tax is governed by Chapter 201 of the Florida Statutes.
- Rates include $0.70 per $100 for deeds and $0.35 per $100 for notes and mortgages.
- Payment is required for recording or enforcement, and exemptions exist for certain transactions.
Disclaimer: The information and opinions provided are for general educational, informational or entertainment purposes only and should not be construed as legal advice or a substitute for consultation with a qualified attorney. Any information that you read does not create an attorney–client relationship with Barnes Walker, Goethe, Perron, Shea & Johnson, PLLC, or any of its attorneys. Because laws, regulations, and court interpretations may change over time, the definitions and explanations provided here may not reflect the most current legal standards. The application of law varies depending on your particular facts and jurisdiction. For advice regarding your specific situation, please contact one of our Florida attorneys for personalized guidance.
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