real property

Florida Expands Documentary Stamp Tax Newlywed Exemption to All Married Persons

Posted on by khaniauerbach

Florida Expands Documentary Stamp Tax Newlywed Exemption to All Married Persons

QUICK RUNDOWN: On July 1, 2018, the documentary stamp tax statute amendments became effective.  This amendment created a new exemption from documentary stamp taxes for certain instruments (i.e., deeds) that transfer encumbered (a/k/a properties with mortgages) homestead property between newlywed spouses within the first year of marriage. Governor Ron DeSantis subsequently signed into law House Bill 7123, further amending Florida’s documentary stamp tax statute. The item signed by DeSantis becomes effective July 1, 2019 and allows for expansion of the 2018’s “newlywed exemption” to apply to all married persons.  The expanded exemption (doc stamp exemption for all married persons) takes effect on July 1, 2019.

Background

Florida imposes a documentary stamp tax on deeds and other documents that transfer an interest in Florida real property. Section 201.02 of the Florida Statutes governs certain transfers or conveyances that are subject to documentary stamp taxes.

In general, documentary stamp taxes are:

  • Determined based on the consideration given for the transfer. For example, with the exception of Miami-Dade County, documentary stamps in Florida are taxable at a rate of $0.70 for every $100 of consideration ( 201.02(1)(a), Fla. Stat.).
  • Paid to:
    • the clerk of the court if the document evidencing the transfer of title is recorded; or
    • the Florida Department of Revenue, if the document is not recorded.

Consideration may include:

  • The amount paid for the property.
  • The discharge of an obligation (for example, payment of a demand note).
  • The unpaid balance of an underlying mortgage encumbering the property at the time of the transfer.

Section 201.02 of the Florida Statutes also includes limited exemptions from documentary stamp taxes. For example, no tax is due on a deed between spouses or former spouses transferring an interest in their marital home incidental to divorce (§ 201.02(7)(a), Fla. Stat.).

Newlywed Exemption

The 2018 Amendment created a new exemption for transfers of encumbered homestead property (or any interest in the property) between newlywed spouses within the first year of marriage.

Under Section 201.02(7)(b) of the 2018 Amendment, a deed between spouses is not subject to documentary stamp taxes if:

  • The transferred real property is homestead property.
  • The only consideration for the transfer is the balance of an underlying mortgage or other lien encumbering the homestead property.
  • The deed is recorded within one year after the date of marriage.

The exemption applies to transfers or conveyances from:

  • One spouse to the other spouse.
  • One spouse to both spouses.
  • Both spouses to one spouse.

(§ 201.02(7)(b), Fla. Stat.; see Florida Department of Revenue, Florida Documentary Stamp Tax.)

The 2018 Amendment does not affect the exemption for transfers of a marital home between spouses or former spouses incidental to divorce (§ 201.02(7)(a), Fla. Stat.).

Removal of Limitation

The great news here is that this 2019 Amendment removed the requirement that the deed be recorded within one year after the date of marriage, expanding the documentary stamp tax exemption to all married persons. This means that the limitations for the deed to be recorded within one year after the date of marriage NO LONGER APPLIES and the deed between spouses is not subject to documentary stamp tax if:

  • The transferred real property is homestead property; and
  • The only consideration for the transfer is the balance of an underlying mortgage or other lien encumbering the homestead property.

The 2019 Amendment did not change any of the other requirements to qualify for the exemption.

What does this all mean?

This 2019 Amendment provides the added benefit to homestead property under Florida law, providing married couples as much time as they need to plan and coordinate transfers of homestead property among themselves.

Despite the new exemption, the 2019 Amendment does not provide relief to spouses (newlywed or otherwise) seeking to transfer encumbered (mortgaged) homestead property to another form of ownership (for example, a revocable trust). Be sure to speak with a Real Estate attorney to discuss the advantages and disadvantages of transferring homestead property in advance of a couple’s marriage to avoid inadvertently compromising any benefits allowed under Florida law.

At Khani & Auerbach, we are dedicated to providing as much information to assist you in becoming an educated homeowner. Please be sure to follow us on Facebook, Twitter, Instagram, and LinkedIn for additional useful information.  Please call if you need additional information, we are happy to help!