Computations & Closing: Free Florida Real Estate Practice Questions

1. 1. Florida imposes a documentary stamp tax on deeds whenever real property is conveyed. Outside of Miami-Dade County, the statewide rate is:

   • A) $0.70 per $100 (or fraction thereof) of the consideration paid for the property
   • B) $0.35 per $100 of the property's assessed value as determined by the county appraiser
   • C) $0.60 per $100 of the mortgage amount used to finance the purchase
   • D) $2.00 per $1,000 of the purchase price, paid equally by buyer and seller
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   Correct answer: A) $0.70 per $100 (or fraction thereof) of the consideration paid for the property

   The Florida documentary stamp tax on deeds (F.S. 201.02) is $0.70 per $100, or fraction thereof, of the total consideration paid. The tax is based on the purchase price (consideration), not the assessed value or mortgage amount. The $0.35 per $100 rate applies to documentary stamp taxes on promissory notes (mortgages), not deeds. Miami-Dade County applies a different rate of $0.60 per $100 for single-family residences; the $0.70 rate applies everywhere else in Florida.

2. 2. In addition to documentary stamp taxes on deeds, Florida imposes a documentary stamp tax on promissory notes (mortgage notes). A buyer in Orange County finances $180,000 of a home purchase with a new mortgage. What documentary stamp tax is due on the mortgage note?

   • A) $1,260 (using the $0.70 deed rate)
   • B) $1,080 (using a $0.60 rate)
   • C) $900 (using a $0.50 rate)
   • D) $630 (using the $0.35 rate applicable to promissory notes)
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   Correct answer: D) $630 (using the $0.35 rate applicable to promissory notes)

   The Florida documentary stamp tax on promissory notes (mortgage notes) is $0.35 per $100, or fraction thereof, of the face amount of the note -- half the rate applied to deeds. Step 1: $180,000 / $100 = 1,800 units. Step 2: 1,800 x $0.35 = $630. This tax is paid by the borrower (buyer). It is critical to distinguish the two rates: $0.70/$100 on the deed (based on purchase price) vs. $0.35/$100 on the note (based on mortgage amount). The Orange County location is not Miami-Dade, so no county variation applies to notes.

3. 3. On a Florida closing statement, the purchase price of the home appears as what type of entry for the seller and the buyer, respectively?

   • A) A debit to the seller and a credit to the buyer
   • B) A credit to the buyer only; the seller's side shows only the net disbursement
   • C) A credit to the seller and a debit to the buyer
   • D) A debit to both the seller and the buyer because both parties incur obligations
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   Correct answer: C) A credit to the seller and a debit to the buyer

   The purchase price appears as a CREDIT to the seller (they are entitled to receive it) and a DEBIT to the buyer (they owe it). This is the foundational closing statement entry. From the seller's credit of the full purchase price, all seller debits are subtracted (existing mortgage payoff, commission, closing costs, prorated taxes owed) to arrive at the seller's net proceeds. From the buyer's debit of the full purchase price, all buyer credits are subtracted to arrive at the cash the buyer must bring to closing.

4. 4. Florida property taxes are paid in arrears -- the current year's taxes are not due until the following year. At a closing occurring during the tax year, how are property taxes handled on the closing statement?

   • A) The seller pays the entire current year's taxes before closing, and the buyer reimburses the seller for the post-closing months
   • B) The seller receives a debit and the buyer receives a credit equal to the taxes accrued during the seller's period of ownership, since those taxes have not yet been paid
   • C) Property taxes are never prorated at closing in Florida; the buyer assumes full responsibility for the entire year's taxes
   • D) The escrow agent pays the full year's taxes directly from closing proceeds before any disbursements are made
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   Correct answer: B) The seller receives a debit and the buyer receives a credit equal to the taxes accrued during the seller's period of ownership, since those taxes have not yet been paid

   Because Florida property taxes are paid in arrears, the seller has owned the property and benefited from it during part of the current tax year, but the tax bill will not arrive until the following year. At closing, the seller owes their fair share of that unpaid tax. This is reflected as a debit to the seller and a credit to the buyer. The buyer then holds those funds and pays the full annual tax bill when it comes due. The credit compensates the buyer for the seller's share of a tax obligation the buyer will have to pay.

5. 5. Under TRID (TILA-RESPA Integrated Disclosure) rules, the Closing Disclosure must be received by the borrower at least how many business days before the scheduled loan consummation (closing)?

   • A) 3 business days before the closing date
   • B) 1 business day before the closing date
   • C) 7 calendar days before the closing date
   • D) 5 business days before the closing date
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   Correct answer: A) 3 business days before the closing date

   TRID requires the lender to deliver the Closing Disclosure to the borrower at least 3 business days before loan consummation (closing). This waiting period gives borrowers time to review the final loan terms and compare them to the Loan Estimate received earlier. If certain material changes occur (APR increases by more than 1/8%, loan product changes, or a prepayment penalty is added), the 3-day period restarts. The 7-calendar-day rule applies to the waiting period after the Loan Estimate is received, not the Closing Disclosure.

6. 6. A buyer in Brevard County purchased a home for $175,000 prior to January 1, 2007, financing 80% with a new conventional mortgage. Under the law then in effect, what was the total of all three Florida transfer taxes -- documentary stamps on the deed, documentary stamps on the note, and the intangible tax on the new mortgage?

   • A) $1,225 (documentary stamps on the deed only)
   • B) $490 (documentary stamps on the note only)
   • C) $1,715 (documentary stamps on both deed and note, excluding intangible tax)
   • D) $1,995 (combined total of all three Florida transfer taxes)
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   Correct answer: D) $1,995 (combined total of all three Florida transfer taxes)

   NOTE: Florida's intangible tax on mortgages was REPEALED effective January 1, 2007 (Ch. 2006-312) and is no longer collected. This question reflects the former three-tax system. Brevard County is not Miami-Dade. Step 1: Mortgage = $175,000 x 80% = $140,000. Step 2: Doc stamps on deed = $175,000 / $100 = 1,750 units x $0.70 = $1,225. Step 3: Doc stamps on note = $140,000 / $100 = 1,400 units x $0.35 = $490. Step 4: Former intangible tax = $140,000 x $0.002 = $280. Step 5: Historical total = $1,225 + $490 + $280 = $1,995. Under current law (post-2007), only the doc stamps on the deed and note apply.

Not affiliated with Pearson VUE, the Florida DBPR, or FREC. This is an independent study tool; questions are original and verified against Florida statutes and FREC rules.