The Title Insurance Committee of The Florida Bar’s Real Property, Probate, and Trust Law Section just alerted me about a recent opinion given by the Florida Department of Revenue (DOR) in response to a “short sale” question. I was surprised by the DOR’s opinion and so I though it was worth “blogging” about. The DOR was asked how to calculate documentary stamp tax on a “short sale” real estate transaction. The DOR responded, “On a “short sale” of real property documentary stamp tax is due on the sale price plus any debt that is forgiven”. (Emphasis added) The DOR gave the following example:
Current mortgage balance is $200,000.00; real property sold for $150,000.00; Bank forgives [mortgage] debt of $50,000.00. Total consideration for the transfer of the real property is $200,000.00, upon which documentary stamp tax is calculated.
In its letter, the DOR did not say how to calculate doc stamps when the Bank does not write off the debt but takes a promissory note from the seller for the shortage. The RPPTL Section’s Title Insurance Committee says that it is reviewing this issue and may request a formal written opinion from the Attorney General’s office. EWM Title will fill you in as soon as any such opinion is issued. In the meantime, EWM Title will be sure to calculate documentary stamps consistent with this “advisory” opinion.