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Documentary Stamp Taxes: A Break for Spouses

By: Nomiki Zervos, Associate Attorney, Davis Basta Law Firm, P.A.

Transferring property can be both exciting and complicated. It’s not as simple as tendering the purchase price to the seller or changing the name on a deed. Before reaching the end result, purchasers typically find themselves amongst a midst of several charges and cash flows.  Amongst these is the documentary stamp tax.

In Florida, a transfer of any interest in real property is subject to a documentary stamp tax in the amount of 70 cents per $100 in consideration. For example, if you were to purchase a home for $200,000, you would owe an additional $1,400 in documentary stamp taxes. While most typically accept this as a necessary evil, not all transactions are the same and a documentary stamp tax might not always apply. The Florida Legislature has carved out two exceptions to documentary stamp taxes when the transaction involves a marital home. In fact, the exceptions apply in the context of two different extremes: (1) divorce and (2) new marriages.

In the context of divorce, the transfer of the marital home between spouses or former spouses is exempt from documentary stamp taxes. This is true if dissolution proceedings are still pending, finalized, or haven’t even started yet if the transfer occurs within one year before dissolution.

In the context of new marriages, the transfer of the marital home between newlyweds is exempt from documentary stamp taxes if the transfer is recorded within one year of marriage and the only consideration exchanged is the remaining balance on a mortgage or lien against the property. This is the newest exception to the imposition of documentary stamp taxes and gives title transfers the same break when adding a spouse that they receive when removing one.

Before this exception went into effect in July 2018, documentary stamp taxes on transfers between spouses were 70 cents per $100 of consideration based on half the underlying mortgage on the property. Note, however, that this rule still applies if the transfer of the marital home between spouses occurs after the first year of marriage.

Documentary stamp taxes can add up quickly in a transaction. For that reason, exceptions to paying them can add up, too. There are several nuances in the law for different transactions and persons in the context of real estate transactions. This is just one of them, but it serves as an example as to why it is important for parties to seek the legal expertise of a real estate attorney in a real estate transaction. Unlike other professionals involved in a real estate transaction, such as a realtor, broker, title agent, or lender, the real estate attorney can properly advise you of the pros and cons of a particular transaction and recommend the best course of action most suitable to your circumstances and goals.

About the Author:

Nomiki Zervos is an associate attorney at the Davis Basta Law Firm, P.A., a boutique real estate firm in Palm Harbor, FL. She handles real estate transactions and other property related disputes. Nomiki graduated from the University of Florida Levin College of Law in May 2018 with honors. She can be reached at nzervos@davisbastalaw.com.

The opinions of any particular author are not necessarily the opinions of Attorneys' Real Estate Councils of Florida any of the local Real Estate Councils or Attorneys’ Title Fund Services, LLC.