Closing Math & Property Taxes

Documentary stamp tax on deeds

Deed stamps are 70¢ per $100 of consideration (or portion thereof) everywhere except Miami-Dade (§ 201.02, Fla. Stat.). In Miami-Dade, the rate is 60¢, plus a 45¢ surtax unless the property conveyed is only a single-family residence (Florida Department of Revenue, Documentary Stamp Tax; § 201.031, Fla. Stat.). Consideration includes any mortgage or encumbrance on the property, whether or not the underlying debt is assumed.

Worked example: sale price $412,350 (Broward). Divide by 100 and round up: 4,124 units × $0.70 = $2,886.80.

Property tax calendar

• Real property is assessed as of January 1 (§ 192.042, Fla. Stat.).
• Taxes are due November 1 and become delinquent April 1 of the following year, or 60 days after the tax notice is mailed if that's later (§ 197.333, Fla. Stat.).
• Early-payment discounts are 4% in November, 3% in December, 2% in January and 1% in February (§ 197.162, Fla. Stat.).

Homestead exemption math

The first $25,000 of assessed value is exempt from all taxes (§ 196.031, Fla. Stat.(1)(a)). An additional exemption of up to $25,000 applies to assessed value greater than $50,000, for all levies other than school district levies (§ 196.031, Fla. Stat.(1)(b)). That additional $25,000 is now adjusted annually for inflation. Classic exam version (unadjusted): a homestead assessed at $300,000 gets $25,000 exempt from school taxes and $50,000 exempt from non-school taxes.

Taxes = taxable value × millage ÷ 1,000. One mill = $1 per $1,000 of taxable value.

Prorations

Prorated items (property taxes, HOA dues, rents) divide expenses between buyer and seller. Read your contract for the method (365-day year vs. 12 30-day months) and for who is charged with the day of closing. Exam questions state the convention to use.

Example: annual taxes of $7,300, closing on April 30, seller pays through April 29 under a 365-day method. January 1 to April 29 = 119 days. $7,300 ÷ 365 = $20/day × 119 = $2,380 debit to seller, credit to buyer (taxes are paid in arrears).

Commission and net-to-seller

• Commission = price × rate.
• To find the price needed to net a target amount: price = net ÷ (1 − commission rate).