A Florida property sold for $400,000. Calculate the documentary stamp tax on the deed:
Question & Answer
Review the question and all answer choices
$1,400
Answer A ($1,400) is incorrect because it results from using a $0.35 tax rate instead of the correct $0.70 rate. This mistake often occurs when confusing the deed tax rate with other Florida real estate tax rates.
$2,800
$4,000
Answer C ($4,000) is incorrect because it represents only the first step of the calculation ($400,000 ÷ $100 = 4,000) without applying the tax rate. This is a common calculation error where students forget the final multiplication step.
$800
Answer D ($800) is incorrect because it results from dividing the sale price by $500 instead of $100. This mistake typically occurs when misremembering the calculation units for the tax formula.
Why is this correct?
Answer B is correct because it properly applies Florida's documentary stamp tax formula: $400,000 ÷ $100 = 4,000 units × $0.70 tax rate per unit = $2,800. This follows the exact calculation method required by Florida law for deed tax.
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