Florida documentary stamp tax on deeds is:
Audio Lesson
Duration: 3:01
Question & Answer
Review the question and all answer choices
$0.35 per $100 of consideration
Option A is incorrect because $0.35 per $100 is half the actual rate in Florida. This might confuse students who are mixing up Florida's rate with another state or misremembering the amount.
$0.70 per $100 of consideration
$1.00 per $100 of consideration
Option C is incorrect because $1.00 per $100 is double the actual rate in Florida. This could be a distractor for students who have confused Florida's rate with a higher tax rate in another state or have doubled the correct amount by mistake.
$0.50 per $100 of consideration
Option D is incorrect because $0.50 per $100 is a common documentary stamp tax rate in many other states, but not in Florida. Students often remember this general rate but fail to account for state-specific variations.
Why is this correct?
Option B is correct because Florida law specifically requires a documentary stamp tax on deeds at the rate of $0.70 per $100 (or portion thereof) of the consideration paid. This is a state-specific tax that must be paid before the deed can be recorded.
Deep Analysis
AI-powered in-depth explanation of this concept
This question tests knowledge of Florida's documentary stamp tax on deeds, a crucial concept in real estate financing and closing. Understanding this tax matters because it directly impacts closing costs for both buyers and sellers, affecting transaction negotiations and affordability. The question requires knowledge of Florida-specific tax rates, which can be easily confused with other states' rates. To arrive at the correct answer, students must recognize that Florida charges $0.70 per $100 of consideration, not the more common $0.50 rate found in many other states. This question is challenging because it tests specific state knowledge rather than general principles, and the options are close numerical values that require precise recall. Understanding this tax connects to broader real estate knowledge about closing procedures, cost estimates, and the financial aspects of property transfers.
Knowledge Background
Essential context and foundational knowledge
The documentary stamp tax is a state-level tax imposed on documents related to real estate transactions. In Florida, this tax applies to deeds, mortgages, and other real estate instruments. The tax revenue supports various state and local government programs. The tax is based on the 'consideration' (typically the purchase price) paid for the property. For deeds, Florida law requires payment of $0.70 per $100 of consideration, with any fractional portion counting as a full $100. This tax must typically be paid before the deed can be recorded with the county clerk, making it an essential closing cost in real estate transactions.
Think of Florida's documentary stamp tax as a 'seven-cent rule' - for every dollar of property value, you pay seven cents in tax. So for a $100 property, it's $0.70, for $1,000 it's $7.00, etc.
When you see a question about Florida's deed tax, immediately recall the 'seven-cent rule' per dollar of property value to quickly calculate the correct amount.
For documentary stamp tax questions, first identify the state and document type, then recall the specific rate. Florida's deed tax is $0.70/$100, while mortgages are $0.35/$100. Don't confuse with other states' rates.
Real World Application
How this concept applies in actual real estate practice
Sarah is helping a buyer purchase a $275,000 home in Miami. As part of her closing cost estimate, she needs to calculate the Florida documentary stamp tax on the deed. Using the $0.70 per $100 rate, she calculates $275,000 ÷ 100 = 2,750 units × $0.70 = $1,925. She includes this amount in the closing disclosure, ensuring her buyer understands this significant state-mandated cost. If Sarah had used the $0.50 rate common in other states, she would have underestimated the closing cost by $550, potentially causing issues at closing.
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