Fla.’s Real Estate Transfer Tax – What To Know

ORLANDO, Fla. – What is transfer tax? Transfer tax is a tax imposed on the seller during a conveyance of property. In Florida, transfer tax is referred to as a documentary stamp tax.

So, what do you need to be aware of when it comes to Florida’s real estate transfer tax, primarily as it relates to transfers between private parties?

Conveyances and real property transfer tax

Conveyances commonly subject to transfer tax in Florida are:

1. Deeds conveying real property for consideration
2. Exchanges of real property
3. A deed in lieu of foreclosure transferring real property from a defaulting borrower to the lender (Conveys title to a lender when a defaulting borrower wants to prevent foreclosure.)
4. Real property sold under foreclosure (Once a property is foreclosed on, transfer tax must be paid on the highest bid received for the property at the foreclosure sale.)
5. Contracts, agreements, leases, and other documents conveying an interest in standing timber, pine stumps, oil or gas leases, and assignments or conveyances of oil, gas, mineral rights, or royalty interested affecting land in Florida
6. Instruments granting a tenant-stockholder the right to occupy an apartment in a building
7. Instruments conveying an ownership in a condominium unit
8. Documents conveying cemetery lots, interment rights or sepulcher rights
9. Easements transferring an interest in real property
10. Conveyances to or by banks or savings and loan associations
11. An installment contract (Installment contract is also known as an Agreement for Deed.)
12. A cancelation of an agreement for a deed (If the purchaser has no personal liability for a default, then the cancelation is not taxable.)
13. A gift of real property encumbered by a mortgage (Tax is based on the unpaid balance of the mortgage at the time of transfer.)
14. The sale of a mobile home if it is permanently affixed to the land
15. An assignment of a lease if consideration is paid
16. An assignment of a successful bid at a foreclosure sale
17. An assignment of a beneficial interest in a Florida land trust
18. A deed between spouses which transfers an interest in Florida real property
19. A deed to or from a trustee conveying real property (This is only applicable when the deed transfers the beneficial ownership of the real property; and consideration is given or paid for the transfer.)
20. Certain direct transfers of real property by a partnership to one of its partners

Generally under Florida law, when ownership interests in an entity owning real property are transferred, transfer taxes are usually not triggered. The exception to this rule is transfers of interest in conduit entities.

A conduit entity is a legal entity to which real property is transferred without full consideration by a grantor who owns a direct or indirect interest in the entity. If ownership interests in a conduit entity are transferred for consideration within three years after real property is conveyed to the conduit entity, then the transfer of ownership interest is subject to transfer tax. (If the conduit entity owns other assets, then the required transfer tax is prorated based on: the value of the transferred real property/the value of all assets owned by the conduit entity.)

Transfer of ownership interests in a conduit entity is not subject to transfer taxes if one or more of the following applies:

1. The transfer is a gift
2. The entity shares are publicly traded on a regulated security exchange
3. The transfer is made for estate planning purposes by a natural person to an irrevocable grantor trust

Conveyances not subject to transfer tax in Florida are:

1. A mortgage, release of mortgage, a satisfaction of mortgage, or a reconveyance of real property
2. A gift of unencumbered real property
3. A deed conveying real property when the consideration is nominal
4. Corrective deeds recorded to correct an error or deficiency in a previous deed on which the tax has already been paid
5. A personal representative’s deed given by a personal representative under the terms of a will
6. A deed conveying real property from an agent to the agent’s principal if the real property is purchased for the principal and with the principal’s funds
7. A partition deed of unencumbered real property
8. Leases of real property if the only consideration given to the landlord is the tenant’s promise to pay future rent
9. Conveyances from a bank, savings and loan association, or other mortgagee to a federal agency under a guaranty contract
10. Conveyances between exempt parties (Exempt parties include: the United States Government; the State of Florida; Florida counties, municipalities, and public agencies; Federal and state agencies and their instrumentalities. Note that conveyances between exempt and nonexempt parties are still subject to tax.)
11. Conveyances to the United States or its agencies
12. Cancelling a nonrecourse agreement for deed
13. Conveyances to governmental entities
14. An assignment or transfer of real property from certain nonprofit organizations
15. A transfer of interest in real property under a confirmed bankruptcy plan
16. Under certain specific circumstances – a deed transferring the martial home between spouses
17. A transfer for a real property agreement for certain educational facilities
18. A contract to sell the residence of an employee relocating (This exemption only applies when the contract is between the employee and the employer or the employee and an employee relocating services business.)
19. Consideration

Transfer tax is calculated based on the total consideration for the conveyance.

What is consideration? Consideration is the price paid for the real property interest acquired. If property other than money is exchanged for real property, then it is presumed – for the purposes of consideration – that the amount is equal to the fair market value of the real property interest being transferred.

Transfer tax rate

The current transfer tax rate is $0.70 for every $100.00 of consideration (i.e., 0.70%). An additional surtax may be charged by charter counties in Florida. This surtax cannot be more than $0.45 for every $100.00 of consideration (i.e., 0.45%).

The only county that authorizes an additional surtax is Miami-Dade County. For transfers that involve no consideration, other than a stated nominal consideration, a minimum tax of $0.70 must be paid.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

© Mondaq Ltd, 2023; Originally published 03/09/2023. Michael Iakovou, KI Legal, 40 Wall Street, 49th Floor, New York, NY