LandInvestors.com Forums **Ask A Question** Florida Documentary Stamp Tax

  • Creator
    Topic
  • #6484

    Daryl Cunningham
    Participant
    Post count: 3

    Hey everyone, working on acquiring my 1st property done down in Florida. Does anyone know about the Florida Documentary Stamp tax ($.70 cents per $100), and how to properly pay it? I talked to the county recorder and she said I don’t have to send it in with the deed to be recorded. The deed I created using deed perfect says I am purchasing for good and valuable consideration of Ten Dollars ($10.00) will this effectively eliminate the Documentary Stamp Tax, or will I have to pay that tax based on the actual cost I am paying for the property?

Viewing 6 replies - 1 through 6 (of 6 total)
  • Author
    Replies
  • Michel
    Participant
    Post count: 199
    Pro

    Daryl,
    Congrats on acquiring a property in a tough state. We live in South Florida and don’t even send mailers here. We started our land flipping by buying land on Tax Deed sales. The short answer is if the deed says it was purchased for $10.00 than there are no doc stamp fees. The fees are associated with the cost paid for the property on the deed. Keep in mind if you file like this when you look at the property records later it will say”Sales disqualified as a result of the examination of deed”. What this basically means is that the assessor did not agree with the sales price. It has no effect on the property but to an untrained buyers eye they get nervous.The properties I have sold have all had the sale price and the buyers send in the deed with the fees.

    Mike
    Participant
    Post count: 31
    Pro

    Daryl,

    I buy and sell lots in Florida exclusively.
    In the county that I do most of my transactions, they insist on having the “real” price of the property somewhere on the deed. So, even if the deed says $10, they would want the full price paid to be marked somewhere on the deed. Even scribbled in pen… something like “Consideration: $1200”. Some counties may be different.

    I wasn’t thrilled with this at first, until I thought it through!

    I’ll explain with simplified numbers:
    Let’s say you buy 50 lots over the course of a year for $1000 each and resell them for $2000 each. This means your profit is $50,000. We all know that the IRS will want it’s cut. So, when tax time comes, you file your taxes showing the $50,000 profit.

    However, if for some reason the IRS decides to do a little snooping, and you listed what you paid with the county as $10 per lot, just to save $7.00 per lot in doc stamps ($350 for all 50 of them), now it looks like you made $99,500 profit, not $50,000! Remember, this will all be in the public record.

    I’m sure after a nice, enjoyable audit you can get it straightened out, but why subject yourself to that possible hassle?

    70 cents per hundred dollars is a tiny price to pay when you look at the bigger picture.

    Michel
    Participant
    Post count: 199
    Pro

    @mike,

    I still think it’s pretty impressive to find a niche in florid. There are a lot of owners who paid out their backside for property that has dropped in value. Do you focus on Tax delinquent properties or all in the counties you work in?

    Mike
    Participant
    Post count: 31
    Pro

    @Michel,

    I do not focus on tax delinquent, although I come across some that are. I also NEVER buy tax sale properties because the expense to quiet the title is not worth it. If I see a tax deed when I research a property I pass.

    As far as people who paid a lot of money for their properties.. yes, I get a lot of those folks. I have paid people $1000-$1200 for lots that they paid $25,000-$40,000 for in 2005. These are usually local people who understand they screwed up and are finally ready to move on and close that ugly chapter in their life.

    Of course there are others, usually from the midwest, that feel that since they paid $35,000 11 years ago, it should be worth more today, regardless of the facts. They can get a little nasty, but who cares?

    I also get people who were the original buyers from companies like Gulf Atlantic or General Development in the 60s, 70s, and 80s. These were the folks that would get flown down to Florida, wined and dined for a weekend of high pressure sales, and end up paying ridiculous prices for land that is still not developed today. They have been paying taxes on these lots for 40 years or so and their property is still only worth a fraction of what they originally paid. A lot of these folks are at an age where their adult children are helping them get rid of the property.

    Personally, I do not let the “angry” people bother me. In reality, most of them are angry with themselves for being suckers. They project their anger onto us because its easier for them.
    Of course, if you just do not want to deal with that situation, you can always filter your data to create a list of people who paid below a certain amount for their property, weeding out the ones who overpaid. That way, if you send out $1000 offers to people who, for example, paid $2000 or less, you wont get the ones who are going to be furious. Then, once you build up your confidence, you can remove that filter and the angry responses will be nothing more than just fun stories to tell other land buyers!

    Michel
    Participant
    Post count: 199
    Pro

    @mike,

    Very well said. And i couldn’t agree with you more. We started out journey buying land a year ago from a different program that focused on Tax Deed and Tax certificates. It was a good start and we did make some good money, but like you said it’s a higher investment to acquire them. At the same time we invested in a flip in Georgia with a longtime fiend and mentor. He has been flipping properties for 10 years and this flip couldn’t have been the worst ever. His longtime contractor had someone break in his house and he chased him down the street and shot him, so he was charged with killing the criminal, we had to find a new one, did our due diligence and the one we hired screwed us for about 65K of work. Needless to say the house will be done finally next week after hiring a new contractor almost 1 year of rehab. This drained us so we put the land on slow motion and just did our first big mailer in September and have seen some good return so far. We’ll be full steam ahead once we get our investment back on the house. thanks for sharing your tactics and thoughts. you do need to keep everything in perspective when flipping land our it will get under your skin.

    Milan
    Participant
    Post count: 511

    Great points Mike. There is a gold of info there. Thank you!

Viewing 6 replies - 1 through 6 (of 6 total)

You must be logged in to reply to this topic.