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Florida Intangible Tax and Transfer Tax – How do you calculate these closing costs?

April 16th, 2021 by usdaadmin

When purchasing a home, you never want to be surprised with out-of-pocket expenses.  Remember, even when purchasing with a USDA No Down Payment Loan, you still have to be prepared for other costs to complete the transaction which include Florida Intangible Tax and Transfer Tax. In today’s video, I will go over the details and explain how these costs are calculated so you can be prepared!

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Florida Documentary Stamp Tax

Avon Park, Lake Placid, Sebring USDA LenderThe State of Florida can assess certain taxes on both the transfer of real property and mortgages. Thus, a Florida home buyer must pay additional taxes when purchasing a home.

A number of these taxes stem from Florida’s documentary stamp tax. Below is what the Florida Department of Revenue states the documentary stamp tax is:

“Documentary stamp tax is an excise tax imposed on certain documents executed, delivered, or recorded in Florida. The most common examples are:

  • documents that transfer an interest in Florida real property, such as deeds; and
  • written obligations to pay money, such as promissory notes and mortgages.

Tax is paid to the Clerk of Court when the document is recorded. When a taxable document is not recorded, the tax must be paid directly to the Florida Department of Revenue.” (Chapter 201, Florida Statutes)

Deeds and other documents that transfer an interest in Florida real property are subject to documentary stamp tax.”

So what does all this mean? Basically, Florida taxes are administered to cover the variety of recorded documentation needed when purchasing a home.

Calculating the Florida Transfer Tax

Who pays for Florida Intangible Tax and Florida Transfer Tax when buying a home

According to the Documentary Stamp Tax, when transferring a property deed the Florida Transfer Tax would be calculated by taking 70 cents for each $100 or fractional part. (Florida Statute §Section 201.02(1)(a)) Please note, that the tax rate of .70 cents is applicable in all counties except Miami-Dade.

Furthermore, a promissory note is the document that details the amount owed, interest rate, and the terms of your promise to repay. The state assesses a tax of $.35 cents per $100 of the face value of any promissory note.  (Florida Statue § 201.08(1)(b))

Calculating the Florida Intangible Tax

Lastly, there is a one-time nonrecurring tax commonly referred to as the Florida Intangible Tax. This tax is calculated at 2 mills per each dollar amount of the note ($.002) secured by the mortgage. (§199.133, Fla. Stat.)

Example Calculation

If you are overwhelmed at this point, don’t worry. I’ll go over an example calculation and it will become clear how these taxes are applied. Here’s the situation:

Brenda, the seller, and Steve, the buyer, have agreed to the purchase and sale of a property located in Highlands County for $125,000.  After Steve’s down payment of $25,000, he obtained a promissory note for $100,000 secured by a mortgage.

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Now, because the sales price is $125,000, the Florida Transfer Tax calculation on the deed would be:

  • $125,000 X .0070 = $875.00 (1,250 taxable units X $.70)

Further, because there is a promissory note for $100,000 the following Transfer Tax would also be calculated:

  • $100,000 X .0035 = $350 (Promissory Note)

Lastly, because of the Florida Intangible Tax, the following is also calculated:

  • $100,000 X .0020 = $200 (Intangible Tax)

In total, this amounts to a potential Florida tax charge of $1,425. Now, you can see how these costs can sneak up on you. Just remember, the terms of the sales contract will usually determine who is responsible for each specific cost.

Buyer Closing Costs in Florida

A buyer’s closing costs in Florida may vary from transaction to transaction. Please use us as your resource for any further questions. please please call (800) 806-9836 Ext. 280 or email to discuss your scenario. We are known for returning calls, replying to emails, and responding to your messages.

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