Doc Stamps: Do They Have to be Paid?

When you close on a home, and you look through your closing costs, you may see something called doc stamps. It seems like an unnecessary cost—what are these, and why are you even having to pay for them?
Just Another Tax
Like so many taxes, doc stamps are just a tax, used by governments to generate revenue. There is no other logical reason why they need to be charged, but they are, and thus, they aren’t something you can opt out of. The act of recording a deed on real property, requires the payment of doc stamps.
How Much is Owed?
For most documents, the tax is .70 for every 100 paid for property. But it doesn’t stop there, because there are also doc stamps assessed for mortgages, although those are assessed at a lower .35 per 100. That applies not just to mortgages, but to any other kinds of liens on property, including promissory notes.
Note that your doc stamps can be a bit higher, because some counties will impose their own doc stamps, on top of these state rates.
Remember that so long as money is paid for property, or so long as a mortgage is recorded, the doc stamps must be paid. If there is no consideration, there are no doc stamps owed.
If there are doc stamps owed for both money paid, and for money loaned on a mortgage, they are both taxed separately at their respective rates, and added together for the entire doc stamp obligation. Sometimes, the buyer and seller will both pay part of the obligation, with the buyer paying the mortgage amount and the seller paying the rest of the doc stamp amounts owed.
If you think that you can just file documents that show no consideration is paid, and pay someone “on the side” for property, that won’t work; the state or county can impose doc stamps on the value of the transaction.
Transfer Into a Trust
Often, someone will transfer their own property into a trust. When this happens, there are no doc stamps owed, so long as you (the owner) are the only beneficiary of the trust. But if there is another beneficiary of the trust, and if there is consideration paid or a mortgage, doc stamps would have to be paid on that transaction.
Marriage and Divorce
The one exception to doc stamps, is where property is transferred in or out of someone’s name, as a result of a dissolution of marriage action. The same applies if property is transferred between married spouses—for example, if, during the marriage, the husband transfers property to the wife. But this only applies if the property is homesteaded.
Ability to Foreclose
The failure to pay doc stamps could impair your right to take legal action on the property. For example, if there are no doc stamps paid, you may be forced to pay them before you can foreclose, if you ever had to do so. You also would not be able to legally sell or transfer the property, and record the transfer.
Do your closing the right way. Call the West Palm Beach real estate lawyers at The Law Offices of Larry E. Bray today for help with your real estate sale or purchase.
Source:
floridarevenue.com/taxes/taxesfees/Pages/doc_stamp.aspx