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August 12, 2015

Best Practices: Florida Documentary Stamp Tax and Nonrecurring Intangible Tax Refresher

by Kristen G. Dickey

There are two types of tax that lenders should be aware of when closing either: (i) a loan secured by Florida real property; or (ii) a loan executed in the state of Florida whether or not the loan is secured by Florida real property.

The “documentary stamp tax” is an excise tax imposed on obligations to pay money. §201.08, Fla. Stat. Documentary stamp tax is collected in an amount equal to 35 cents per $100.00 of the amount financed. The tax applies to all promissory notes, non-negotiable notes and written obligations to pay money, which are “made, executed, delivered, sold, transferred or assigned” in Florida, and for each renewal of the same.

The “intangible tax” is a nonrecurring tax on intangible personal property levied on obligations for payment of money which are secured by a mortgage or other liens upon real property located in the state of Florida. §199.133, Fla. Stat. Intangible tax is calculated at the rate of 2 mills on each dollar of the amount financed.

Loan executed in Florida – secured by Florida real property:

  • Both documentary stamp tax and intangible tax, which tax is due and payable upon recording of the Florida mortgage. There is no ceiling or cap on the amount of tax due.

Loan executed in Florida – not secured by Florida real property:

  • Only Documentary stamp tax will be due since there is no Florida collateral. As described above, the documentary stamp tax will be an amount equal to 35 cents per $100.00 of the amount financed unless the loan amount is $700,000.00 or more, in which instance the maximum amount of tax payable is capped at $2,450.00.

Loan executed out of Florida – secured by Florida real property:

  • On occasion, a lender will close a loan where the promissory note is made, executed and physically delivered to the Lender outside of Florida but includes Florida real estate as secured collateral. In this situation, both documentary stamp tax and intangible tax will be due upon recording of the mortgage or lien in Florida securing the indebtedness. If Florida real estate is the only real estate involved in the transaction, then documentary stamp tax of 35 cents per $100.00, or portion thereof, of the indebtedness will be due (e.g. loan amount/100 x 0.35). If the mortgage limits recoverability to an amount less than the face amount of the note, then documentary stamp tax is due on the limitation of the mortgage (or the cap of $2,450.00 if the loan amount is $700,000.00 or more and the mortgage is limited to less than that amount). Intangible tax will be due at the rate of 2 mills on each dollar of the amount financed (e.g. loan amount x 0.002).
  • If the out-of-state note is secured by a mortgage in Florida encumbering only Florida real property and is also partially secured by an out-of-state mortgage, documentary stamp tax and intangible tax will be due based on a specific formula, which I explain in my August 2013 article titled “Best Practices: Florida Documentary Stamp Tax and Nonrecurring Intangible Tax – Out-of-State Loans”.

Loan executed out of Florida – not secured by Florida real property (Note: This applies only to Florida lenders.)

  • The Florida Department of Revenue presumes a note was executed in Florida if the note is made payable to a Florida lender and held in the Florida lender’s files. However, a loan which is not secured by a mortgage or other lien filed or recorded in Florida is not subject to documentary stamp tax (or intangible tax) provided the Florida lender can establish that the note, loan agreement, and other documents are made and executed by the borrower outside the state of Florida and physically delivered to the lender outside the state of Florida. The promissory note and other loan documents may be brought into the State of Florida for safekeeping.
  • Proof sufficient to establish that a note is not subject to tax includes: (1) a sworn affidavit made before an out-of-state notary public at the time of signing of the note by the borrower(s) and delivery of the note to the lender attesting that the signing and delivery occurred in the presence of the out-of-state notary; or (2) any other proof that the borrower made, executed, and delivered the note in another state to a Florida lender.

Lenders should be careful to calculate and collect at closing the amount of documentary stamp tax and intangible tax (if applicable) due on every transaction secured by Florida real property or those transactions executed in the state of Florida whether or not the loan is secured by Florida real property. Failure to collect the necessary funds at closing could place the lender in the difficult position of having to pay any unpaid tax when the instruments are recorded. For more information on Florida documentary stamp tax or intangible tax, please contact Kristen at 407-667-8811 or at kdickey@starfieldsmith.com.