Victor A. Diaz, Esquire

What is the difference between a taxidermist and a tax collector? The taxidermist takes only your skin ~ Mark Twain

Real estate secured transactions in Florida generally implicate the imposition of two types of taxes. The first, commonly known as "documentary stamp tax," is an excise tax imposed on obligations to pay money. §201.08, Fla. Stat. The second, usually referred as "intangible tax," is a nonrecurring tax on intangible personal property levied on obligations for payment of money which are secured by mortgage or other liens upon real property located in the state of Florida. §199.133, Fla. Stat. Failure to pay the taxes subjects parties to additional interest liability as well as possible criminal sanctions. Neither a note nor a mortgage is enforceable in any court of the state until all tax due is paid.

Currently, documentary stamp tax is collected in an amount equal to 35 cents per $100 of the amount financed. The tax applies to all promissory notes, non-negotiable notes and written obligations to pay money, which are made, delivered, sold, transferred or assigned in Florida, and for each renewal of the same. There is no ceiling or cap on the amount of tax due, unless the transaction is not secured by Florida real property, in which case the maximum amount of tax payable is $2,450.

Documentary stamp tax also applies to mortgages recorded in Florida securing obligations to pay money to the same extent as the note. In order to avoid double taxation in cases where there is both an obligation to pay money and a mortgage securing the obligation, the best practice is to place a notation on the note indicating that the proper documentary stamp taxes have been paid in connection with recording of the mortgage. Nothing more that the following legend is needed: DOCUMENTARY STAMPS IN THE AMOUNT DUE BY LAW WERE PAID AND AFFIXED TO THAT CERTAIN MORTGAGE OF EVEN DATE HEREWITH GIVEN TO SECURE THIS NOTE AND RECORDED IN THE PUBLIC RECORDS OF ___________ COUNTY, FLORIDA.

The other tax associated with Florida facilities secured by Florida real property, intangible tax, is calculated at the rate of 2 mills on each dollar of the amount financed. When there is both a mortgage and a note, the documentary stamp tax and nonrecurring intangible tax are due and payable upon recording of the mortgage. There are situations where the amount of both the documentary and intangible tax can vary, such as when the value of the real property is less than the loan amount, out-of-state loans secured in part by Florida real property, loans involving multiple mortgages or mortgages securing personal guarantees. Discussion of these issues are beyond the scope of this article.  

By way of a typical example, in a loan evidenced by a $1,000,000 note secured by a mortgage on Florida real property, the note would be subject to documentary stamp taxes in the amount of $3,500 ($1,000,000 / 100 x .35), as well as intangible tax in the amount of $2,000 ($1,000,000 x .002). Theoretically, the mortgage would also subject to documentary stamp tax in the amount of $3,500. However, by placing a notation on the note reflecting that the proper stamps have been paid in connection with recording of the mortgage, the double taxation may be avoided. In this example, the total amount of tax due would be $5,500.

As noted above, special rules apply to circumstances involving multiple mortgages, out-of-state mortgages and mortgages securing personal guarantees. Lenders should be careful to calculate and collect at closing the amount of documentary stamp tax and intangible tax due on every transaction secured by Florida real property to make sure they are paid upon recording the instruments. Failure to collect the necessary funds at closing could place the lender in the difficult position of having to pay any unpaid tax if it becomes necessary to liquidate the collateral; not to mention the possible civil and/or criminal penalties available to the ever vigilant Florida Department of Revenue.

For more informatio on Florida documentary stamp tax or intangible tax please contact Victor at VDiaz@starfieldsmith.com or (407)  667-8811.

  Back to top