To be certain, Florida documentary stamp tax is a vast and complicated topic worthy of a book. In this article, however, I would like to direct your attention specifically to the lender’s obligation to pay this tax directly to the Florida Department of Revenue in certain circumstances and the method through which that payment is completed. Yes, the Florida documentary stamp tax may be passed on to a borrower as an applicable closing cost, but the responsibility to pay this tax remains with the lender who is considered the taxpayer.
Florida documentary stamp tax is an excise tax imposed on certain documents made, executed, or delivered in Florida. Therefore, the following types of loans, whether made by a Florida lender or a non-Florida lender with a footprint in Florida, would be subject to payment of Florida documentary stamp tax:
- Loan made, executed or delivered in Florida and secured by Florida real estate;
- Loan made, executed or delivered in Florida which is not secured by Florida real estate; and
- Out of state loan which is secured by Florida real estate.
A loan secured by Florida real estate will include a mortgage, security agreement, or other evidence of the indebtedness to be recorded in Florida and that document is taxable at the time of recordation. In this situation, lender’s counsel or the title company handling the transaction (on behalf of the lender) will pay Florida documentary stamp tax to the clerk of the court when the document is recorded. The documentary stamp tax is based on the full amount of the indebtedness or obligation secured by the mortgage at the rate of 35 cents per $100 or fraction thereof of the amount secured thereby. There is no cap on the amount of tax due. See §201.08, Fla. Stat. (2020)
But what happens when the loan is not secured by Florida real estate? An unrecorded document, such as a promissory note or other written obligation to pay money, is also taxable, and it is the lender who has the responsibility to pay the Florida documentary stamp tax directly to the Florida Department of Revenue. The documentary stamp tax is due on the full amount of the indebtedness or obligation evidenced by the taxable document at the rate of 35 cents per $100 or portion thereof but the tax is capped at $2,450.00. See §201.08, Fla. Stat. (2020)
Generally, documentary stamp tax paid directly to the Florida Department of Revenue is paid by check and remitted to the state using a Documentary Stamp Tax Return for Nonregistered Taxpayers’ Unrecorded Documents – Form DR-228 . However, any lender that averages five or more taxable transactions per month must register to report and pay documentary stamp tax using the online registration system or submit a paper Florida Business Tax Application – Form DR-1 . Nonregistered and registered lenders are permitted to file and pay documentary stamp tax electronically, but, lenders who paid $20,000 or more in documentary stamp tax during the most recent state fiscal year (July 1 – June 30) must pay electronically during the next calendar year.
Once registered with the Florida Department of Revenue, a lender reports and pays documentary stamp tax using a Documentary Stamp Tax Return for Registered Taxpayers’ Unrecorded Documents – Form DR-225 . Payments are remitted once a month and not with each transaction. Registered lenders must file a return for each reporting period, even if no tax is due. Registered lenders must also notify the Florida Department of Revenue upon: (i) business name change; (ii) mailing address change; (iii) location address change (within the same county); or (iv) closure or sale of the business. Finally, registered lenders must submit a new registration using the online registration system or complete a paper Florida Business Tax Application – Form DR-1 upon: (i) legal entity change; or (ii) ownership of business change.
For more information on the calculation and payment of Florida documentary stamp tax with respect to a loan, please contact the attorneys at Starfield & Smith at (407) 667-8811 or (215) 542-7070.