OK so the Department of Revenue in Florida has decided to charge Documentary Stamps (tax) on the amount of mortgage forgiveness related to short sales. Doc Stamps in Florida are charged at the rate of $.70 per every $100 on the Deed of every real estate transaction.
For example: If you sell your house for $100,000 the seller pays $700 in doc stamps.
Now what the State is saying is that if you sold that same house for $100,000 BUT it was a short sale where the Lender forgave $50,000 the tax due is now $1,050!!!
So this brings up some interesting questions.
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How many out of State lenders are going to be willing to give the "forgiveness" amounts to the title company?
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How is this going to affect future appraisals where the appraiser relied on Doc Stamps as an indicator of sale price?
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What about a closing where the Seller brings money to closing? Will they too have to pay Doc Stamps on their mortgage balance instead of the sales price?
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Will the Department of Revenue ever get their head out of their ass?
Oops!! Did I just say that? Oh well.....what say you?
Reserved Parking For "The Lovely Wife"...TLW...ROAR!
Blog Boy...
This is what I say: "It's been years upon years since The State has seen daylight" :)
We are talking about the same government body who cut the education budget then followed it up with the statement:
"Will you parents out there stop home schooling children" :)
TLW...ROAR!
Good question.
Short sales are here to stay
Keep on blogging
Bill
Bryant - From where I sit and ponder things.....the head will remain planted firmly where it currently resides.
Oh Broker Bryant-it never ends with the short sales that is for sure and I wonder how to many properties may not close due to this. Do people really ever get a second chance?
Bryant good questions that need answers. We don't have a stamp tax here in Connecticut, but we have a Conveyance Tax which is the same thing. Here in Middletown it is 1%, and they were trying to impose a Conveyance Tax on the Buyer as well.
Geez! It never ends. Check the code and see if the code says the tax is to be charged on the transfer price or market value. I doubt if that tax is even legal.
Market is too subjective.
Don't they know that real estate taxes in Florida are one of the reasons folks from up north are not buying at the rate they once were? Even with market prices in the dumps, the taxes are a serious matter to retirees and others on fixed incomes.
It is the lack of income tax that brings many folks to Florida. If the real estate related taxes are going to keep going up, relocating home buyers will just not go there.
BB, Short sales...short sales....short sales...lalalala....that's all we do! Don't mind me...on so short saled out:)
This new ruling seems pretty ridiculous. The state is simply stretching the law in order to fill their empty coffers. I bet if someone filed a lawsuit against the DOR that the state would lose big time.
What better way to spend the federal tax refund sent out this year?
I say that sucks too! Talk about kicking someone when they are down.
BB,
I'm in agreement with Lenn on whether or not it's the transfer amount. We pay $1.10 her per one-thousand and it's on the transfer value. We know what the loan amount has nothing to do with actual value, especially today.
Yikes................as if it wasn't enough.
As they say in California, SUE THEM cause I'll bet Lynn is absolutely right. Sue their ASS off cause that's where their head is at.
Broker B, I'll trade you 5 of our beaurecrats for a warm beer and 2 dead fish.
First time I read about this on AR, I thought this was a mistake. It is called Documentary Stamp on the Deed, so I thought the only amount they can collect is on the amount shown on the deed. Looks like evething is possible, and even illogical things are still possible.
Another classic example of Bueracracy gone wild! Lets not take time to see what is the right thing to do for the people. Instead let's make sure we protect that revenue stream.
After all every one knows that the people who are in trouble are all Speculator's and Investor's who have gotten rich and now are calling for a bail out. Right?
MORON's !
BB, Where were all the voters when this was passes? I guess the state Gov't thinks it is easier to take advantage of the down and out, just like they found it easier to blame someone else for the credit/housing crisis we are in. aj
I've not heard about that in our area I'll ask my title rep tomorrow.
Our greedy lawmakers have not thought of that yet. We have a conveyance tax which is very similar, without the short sale penalty.
By the way in Dade county it's only .60 per 100 on doc stamps unless they changed it the last time we closed in Dade.
BB- Just what we needed...another obstacle to stall the housing market. Haven't come across this little gem yet. Ugh..
Neal, That's strange since doc stamps are a State tax not a county tax. Maybe there's an add on or something.
Allison, I know!!! I did get approval on 2 of my short sales today so that's a good thing. Of course I'll now have to eat the additional doc stamps since there ain't no way I'm going back to the lender to approve another HUD!!
I agree completely with you guys who are saying this is probably an illegal tax. It makes no sense at all to tax the short. I imagine the title companies will be fighting this as it creates a whole bunch of extra work for them.
All I know is it's getting harder and harder to get through this current real estate market. It's just one thing after another.
Bryant- Our attorney just sent the issue over to us. She was talking to the DOR to make sure of the interpretation and this is correct what you are saying. I think this may be illegal too. Not only that but law suits may start to happen against short sale lenders who foreclose when they could have taken a short sale. This is just another obstacle that is so ridiculous. There will be sellers that the extra $500 to $1000 will be enough to just walk away and not complete the short sale. Our state is supposed to start helping us, not being our enemy.
Hi Katerina, The other problem is with HUDs that have already been sent and approved. I had 2 approved today and I certainly won't be changing them at this time. So unless my sellers pay it I'll be eating it. I don't know how the title companies are going to get these figures from the lenders.
FYI, I got a short sale approved today with HomeEQ Servicing where the buyer is going FHA with Nehemiah and is getting a total of 9% in seller concessions!!!! Who'd of thunk it!!!
Wow - I'm so glad I live in Idaho - this is ridiculous!
Bryant - I don't know the answer to any of those questions except for the last one. The question about the Department of revenue getting it's head out of it's ass? Never
And a lot of people are moving to Tennessee from Florida because the cost of living is lower here. But our government has it's head up it's ass also.
They are charging builders enormous impact fees to make up for the loss in revenue they were getting 2 years ago. What's the result, higher prices homes. The homes don't sell because they are too high, the builders quit building, the taxes stop coming, the govenment decides to raise taxers again because they don't have enough money. Are they stupid or what.