Tuesday, August 19, 2008

Florida: Short Sale Sellers Pay Extra Taxes

Incredible! My state, Florida, has decided to reap additional taxes on those who have the unenviable position of having to do a Short Sale to save themselves from foreclosure or other financial ruin. Florida, like some other states, has a standard tax to the seller whenever there is a sale of real property. It is based on the sales price. Some states call this a "conveyance" tax. Florida calls it "Documentary Stamps on the Deed". It's a tax. The calculation is the sales price multiplied by .007, roughly. Thus, a sale of $300,000 would trigger taxes due at closing to the State of Florida for $2,100. What title agents, also called closing agents, have done up until now is to collect this tax based on the sales price in the contract. But now, in a letter dated August 7, 2008, the Florida Department of Revenue has made it clear to title agents that they must charge this tax on the full amount of the forgiven debt. So, in the case where a home is sold for $300,000 and mortgage debt of $100,000 is cancelled, Florida wants an additional $700. Apparently, they want their money now. Thus, we have title agents scrambling to collect extra taxes on past closings. How are they going to get that money? I doubt the lenders will cough it up so quickly. And, who is really paying here? This extra tax might seem like a gold mine to Florida. It probably totals in the millions. Again, who is really paying this fee? I see it as opportunistic only.

It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.

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Copyright © 2008 By Wendy Rulnick. All Rights Reserved. *Florida: Short Sale Sellers Pay Extra Taxes* Contact Wendy Rulnick regarding Destin Florida real estate and vicinity.

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