Florida Documentary Stamp Tax for Businesses: Deeds, Promissory Notes, Mortgages, and the Intangible Tax on Loans

Short version: Florida Intangibles Tax: Repealed, Except on Mortgages

Florida's documentary stamp tax is an excise on documents, and business owners meet it more often than they expect. On deeds — the transfer tax: a deed (or other instrument) transferring an interest in Florida real property is taxed on the consideration — the price paid, including any mortgage on the property, whether or not the buyer assumes it — at a rate of 70 cents per US$100 of consideration (0.7 percent) statewide, with Miami-Dade County at 60 cents per US$100 plus a 45-cent surtax for property other than a single-family residence (so US$1.05 per US$100 on a Miami-Dade commercial building); the seller customarily pays it in most of Florida (the contract decides), and it is paid when the deed is recorded. On notes and written obligations to pay money: a promissory note, a loan agreement, a written promise to pay — made, executed, delivered, sold, transferred, or assigned in Florida — is taxed at 35 cents per US$100 of the obligation's face amount (0.35 percent), with a cap of US$2,450 on a note that is not secured by a mortgage on Florida real property (s. 201.08(1)(a); the cap doesn't apply to a mortgage or other recorded security instrument); a note secured by a Florida mortgage is taxed on its full amount with no cap; the tax is paid by the maker (the borrower) in most cases, and most Florida appellate courts have refused to enforce a note that should have been stamped and wasn't until the tax, penalties, and interest are paid (one district has held the bar applies only to mortgages) — the practical enforcement that makes lenders insist on it. On mortgages — the intangible tax: a mortgage, lien, or other security interest on Florida real property securing a note also carries the nonrecurring intangible tax — 2 mills (0.2 percent) of the amount secured, paid when the mortgage is recorded (s. 199.133). Who meets it in business: the business that buys real estate (the stamps on the deed — usually the seller's cost — and the stamps and intangible tax on the purchase-money mortgage — the buyer's cost: a US$1 million mortgage costs US$3,500 of stamps on the note and US$2,000 of intangible tax); the business that borrows from a bank (an unsecured line of credit or term loan's note — stamps at 0.35 percent capped at US$2,450; a loan secured by Florida real estate — stamps on the full amount plus the intangible tax); the owner who lends money to the company (a written note from the company to its owner — stamped, or unenforceable if the relationship ever sours or the company fails; the owner-loan note that nobody stamped is a common find in a Florida business's records); seller financing of a business sale (the buyer's note to the seller — stamped at 0.35 percent, capped if unsecured by real estate); the renewal or modification of a note (a renewal that increases the principal is taxed on the increase; a renewal with no new money is not taxed again if it is signed by the original obligor, renews only the unpaid balance, and has the original stamped note attached — s. 201.09); and the equipment financing agreement (a written obligation to pay — taxable, capped if unsecured by real property; a true equipment lease is taxed only if it contains an unconditional written obligation to pay money, and a lease that hands over ownership once the payments equal the property's value is taxed like financing). The LLC transfer — the unexpected stamps: transferring Florida real estate into an LLC is a deed — and documentary stamp tax is due on the consideration; for a transfer by the owner to their own wholly owned LLC with no consideration, the tax is minimal (a nominal consideration) — but if the property is mortgaged, the mortgage balance is treated as consideration (the grantor is relieved of it, or the LLC takes subject to it), and stamps are due on it (s. 201.02(1)(a) counts any mortgage or encumbrance as consideration, whether or not the debt is assumed); a business owner restructuring real estate into a separate LLC (the auto repair entity guide's structure) plans the transfer's stamps (and the lender's consent — the short-term rental entity guide's due-on-sale point) before recording. The conduit-entity rule: when Florida real property is conveyed to an entity for less than full consideration by a grantor who owns an interest in it, and any of the grantor's interest is then sold within three years of the conveyance, each sale is taxed at 70 cents per US$100 of the price paid for the interest (prorated if the entity holds other assets) — s. 201.02(1)(b), an anti-avoidance rule aimed at moving property into an LLC and then selling the LLC to avoid deed stamps, with no 50 percent threshold — so selling membership interests in a real-estate-holding LLC can trigger the tax. Cross-border: a note signed in Canada and delivered to a lender in Florida is taxable, while one signed and delivered to a Canadian lender outside Florida is outside the note tax unless it is secured by a mortgage recorded in Florida (taxed at recording); a Canadian owner's loan to their Florida company is the same as any owner loan. The income tax side: the documentary stamp tax on a deed paid by a seller is a selling expense (reducing the amount realized); paid by a buyer, it is added to the property's basis; on a loan, the stamps and intangible tax are loan costs — amortized over the loan's term (not deducted in the year paid — they are costs of obtaining the loan, capitalized and amortized as debt issuance costs under Treas. Reg. §1.446-5). The bookkeeping: every note the business signs or holds — with the stamps paid (the receipt or the stamped note); owner loans documented and stamped; real estate transfers with the stamps computed on consideration including mortgages; the loan costs' amortization schedule. The errors: an owner's loan to the company undocumented or unstamped (unenforceable and unprovable); real estate moved into an LLC with a mortgage without computing the stamps; loan stamps deducted in the year paid instead of amortized; seller-financing notes in a business sale unstamped; and the three-year conduit-entity rule forgotten when a property-holding LLC is sold.

Key takeaways

• Deeds transferring Florida real property: 70 cents per US$100 of consideration (Miami-Dade 60 cents plus a 45-cent surtax on non-single-family property) — consideration includes any mortgage on the property, assumed or not.
• Notes and written obligations to pay: 35 cents per US$100 — capped at US$2,450 if not secured by Florida real estate; most Florida courts won't enforce an unstamped note until the tax is paid.
• Mortgages add the nonrecurring intangible tax of 2 mills on the amount secured.
• Owner loans to the company, seller-financing notes, and equipment financing are all taxable obligations — stamp them.
• Moving mortgaged Florida real estate into an LLC is a taxable deed on the mortgage balance, and selling any interest in an LLC that received the property from that owner for less than full consideration within the past three years can trigger deed stamps.
• On the income tax return: deed stamps are a selling expense (seller) or basis (buyer); loan stamps and intangible tax are amortized over the loan's term.

The Florida documentary stamp file

Every note signed or held: amount, security, stamps paid (capped or full). Owner loans: written, stamped, interest at the applicable federal rate. Real estate transfers: consideration including mortgages; stamps; lender consent. Entity interest sales: the three-year conduit-entity check. Income tax: selling expense, basis, or amortized loan cost. The owner-loan note is the item most often missing.

Worked example

A Fort Lauderdale manufacturer buys its building for US$3.2 million with a US$2.4 million bank mortgage: the seller pays US$22,400 of deed stamps (0.7 percent — reducing the seller's amount realized); the company pays US$8,400 of stamps on the note and US$4,800 of intangible tax on the mortgage — US$13,200 of loan costs amortized over the loan's ten-year term on the income tax return, not deducted this year. The owner lends the company US$150,000 for working capital: a written promissory note at the applicable federal rate, stamped at US$525 (0.35 percent — under the cap because it's unsecured by real estate). Two years later the owner moves the building into a separate real estate LLC to lease it back to the company (the auto repair entity guide's structure): the mortgage's US$2.2 million remaining balance is consideration for the stamps — about US$15,400 — computed and paid at recording, with the bank's written consent obtained first. Her competitor's company, sued by its former co-owner, couldn't enforce a US$400,000 note the co-owner had signed years earlier until it paid the stamps, the penalty, and the interest on a note nobody had ever stamped.

Official sources

The Florida Department of Revenue states: “Documentary stamp tax is an excise tax imposed on certain documents executed, delivered, or recorded in Florida. The most common examples are: Documents that transfer an interest in Florida real property, such as deeds; and Written obligations to pay money, such as promissory notes, and recorded mortgages.” — Florida Department of Revenue, Florida Documentary Stamp Tax, https://floridarevenue.com/taxes/taxesfees/Pages/doc_stamp.aspx

IRS Publication 538 explains: “A corporation or partnership, other than a tax shelter, that meets the gross receipts test can generally use the cash method. A corporation or a partnership meets the test if its average annual gross receipts for the 3 prior tax years were $26 million or less (indexed for inflation).” — Internal Revenue Service, Publication 538 (01/2022), Accounting Periods and Methods, https://www.irs.gov/publications/p538

Practitioner note

Florida taxes paper, and a business meets the stamps on more than real estate closings: the owner's loan to the company, the seller-financing note in a business sale, the equipment financing agreement, and the deed that moves mortgaged property into an LLC — where the mortgage balance is the consideration. Our Florida files keep every note stamped (most Florida courts won't enforce an unstamped note until the tax and penalties are paid), compute the stamps on any restructuring before the deed is recorded, and amortize the loan stamps and intangible tax over the loan's term rather than deducting them in the year paid.

See also: For related guidance, see Florida corporate income tax and Form F-1120; and browse every small business tax guide, by situation.

Next step

Fairlight Accounting is a cross-border accounting and tax practice with a U.S. Tax Desk and a Canadian Tax Desk. Our U.S. Tax Desk handles Florida documentary stamp tax compliance for businesses — deed stamps on purchases and entity transfers, note stamps and the unsecured cap, nonrecurring intangible tax on mortgages, owner loan documentation, controlling-interest transfer rules, and income tax treatment of stamps as selling costs, basis, or amortized loan costs. See pricing or book a call.