A buyer purchases a beachfront condo for $850,000. The transaction includes a $680,000 purchase money mortgage, a seller-held second mortgage of $85,000, and the buyer's assumption of a $25,000 special assessment lien. What is the total documentary stamp tax due?
Correct Answer
B) $6,247.50
Correct: Deed tax on $850,000: $850,000 ÷ $100 × $0.70 = $5,950. Second mortgage tax: $85,000 ÷ $100 × $0.35 = $297.50. Total: $5,950 + $297.50 = $6,247.50. The purchase money mortgage is exempt, and special assessments don't affect documentary stamp tax. Why not A: This omits the tax on the second mortgage. Why not C: This incorrectly includes tax on the purchase money mortgage. Why not D: This uses an incorrect calculation method.
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