- Do You Have to Pay Transfer Tax to Put a Deed Into a Trust?
- Capital Gains Tax on Sale of Home Involving a Deed Transfer
- Are Property Taxes Re-Evaluated With a Life Estate Deed?
- What Is a Taxable Deed Stamp?
- How Does a Quitclaim Deed Affect Your Personal Taxes?
- Assignment of Deed of Trust Vs. Deed or Grant Deed
When you purchase a home you negotiate with the seller to reach a sales price you both agree on. Sometimes the negotiations will include determining which party will pay for additional costs, such as transfer taxes. However, in some states it's customary for one party to pay certain expenses. In the state of Florida, the seller commonly pays for the deed transfer taxes.
Deeds complete the transfer of ownership between the seller and buyer when a property is purchased. The deed lists the grantor's name and states that he conveys his rights of ownership to the grantee for a certain consideration amount — the sales price. A legal description of the property is included as well. Commonly a warranty deed or special warranty deed is used when a property is purchased. Quitclaim deeds are generally used for transfers between related parties — such as husband and wife — when money doesn't actually change hands.
Many states impose some type of tax on property transfers. Florida calls its tax the documentary stamp tax. Individual counties are responsible for collecting the tax, which is then sent to the state department of revenue to be used accordingly. In Florida, the tax is due when the deed is presented to the county clerk to be filed on record.
Florida documentary tax stamp rates are the same in each county, with the exception of Miami-Dade. The rate is equal to 70 cents per $100 of the deed's consideration. For example if a property is purchased for $200,000, first divide the sales price by $100, then multiply by .70 for a total of $1,400 for documentary tax stamps. Miami-Dade's tax rate is 60 cents. It's customary for the seller of the property to pay for this tax in Florida. Typically, the real estate agent obtains a check for the amount from the seller before the deed is recorded. However, depending on terms of the sales contract, the buyer might cover the tax.
A few entities are exempt from paying stamp taxes in Florida. These include government agencies, state agencies, counties and municipalities. Additionally, no tax is charged if the deed is only being changed — such as adding a spouse as an owner. In addition to the stamp tax on deeds, it's also charged on mortgages. The rate implied for mortgage loan balances is 35 cents per $100. Typically the buyer pays this tax. The amount is generally included in the closing costs.