Real estate secured transactions in Florida generally implicate the imposition of two types of taxes.  The first is an excise tax imposed on obligations to pay money (the “documentary stamp tax”).  §201.08, Fla. Stat.  The second is a nonrecurring tax on intangible personal property levied on obligations for payment of money which are secured by mortgage upon real property located in Florida (the “intangible tax”).   §199.133, Fla. Stat.  Neither a note nor a mortgage is enforceable in any court of the state until all tax due is paid.

A loan which is not secured by a mortgage or other lien recorded in Florida generally is not subject to documentary stamp tax or intangible tax, provided the note, loan agreement, and other documents are made, executed, and physically delivered by the borrower to the lender outside of Florida.  To support this position, the lender should maintain appropriate documentation in the loan file evidencing execution and delivery outside of Florida.  If the note, loan agreement, and other documents are “made, executed, delivered, sold, transferred, or assigned” to the lender in Florida (including renewals thereof), then documentary stamp tax will be due even though there is no Florida real estate collateral.  §201.08, Fla. Stat. 

In certain transactions, a lender may close a loan in which the promissory note is made, executed, and physically delivered to the lender outside of Florida, but the indebtedness is secured by Florida real property. In such circumstances, Florida documentary stamp tax and nonrecurring intangible tax are due upon the recording of the mortgage or other lien in Florida securing the obligation.

• Documentary stamp tax will be calculated on the full amount of indebtedness or obligation evidenced by the taxable document at the rate of 35 cents per $100.00, or portion thereof (e.g. loan amount/100 x 0.35).  §201.08, Fla. Stat.
  • If the mortgage limits recoverability to an amount less than the face amount of the note (a maximum lien), then documentary stamp tax will be: (i) paid on the maximum lien of the mortgage; or (ii) capped at the statutory maximum 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 calculated at the rate of 2 mills on each dollar of the amount financed (e.g. loan amount x 0.002).  §199.133, Fla. Stat. 
  • If the mortgage limits recoverability to an amount less than the face amount of the note (a maximum lien), then intangible tax will be paid on the maximum lien of the mortgage.

While documentary stamp tax and intangible tax may be passed on to a borrower as an applicable closing cost, the responsibility to collect and pay these taxes at the time of recording of the mortgage or other lien securing the obligation remains with the lender who is considered the taxpayer.  Therefore, it is important for lenders to carefully calculate and collect at closing the amount of Florida documentary stamp tax and intangible tax (if applicable) due on every loan, but especially when: (i) the note is executed in Florida; (ii) the note will be delivered to the lender in Florida; or (i) the note 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 collect and pay additional tax post-closing.

For more information on Florida documentary stamp tax or intangible tax, please contact the attorneys at Starfield & Smith at (407) 667-8811 or (215) 542-7070.