FL Short Sale Buyers May Be Clipped For Extra "Doc Stamps" As State Claims Calculation Of Amount Due To Reflect Any Debt Forgiveness On Seller's Loan

In Florida, the South Florida Daily Business Review reports:

• Imagine buying a house for much less than its market value only to discover you’ll incur an additional tax bite of hundreds or thousands of dollars. State revenue collectors now say buyers of short sales, the term used for houses that sell for less than the mortgage owed on them, must pay more in real estate transfer taxes called documentary stamps ["doc stamps"].

***

• In a short sale, lenders agree to the transfer of a property and generally forgive the unpaid mortgage amount, though some require a promissory note from the seller for the unpaid balance.

• In an August letter to a title insurance attorney, a tax specialist for the state Department of Revenue (DOR) said buyers should pay transfer taxes on the short-sale purchase price plus the forgiven debt amount. Whether the department’s position will stand is the subject of considerable discussion among real estate attorneys and title insurers. The department is expected to issue what’s called a binding opinion within two weeks, said spokeswoman Renee Watters.(1)

For more, see Real Estate: What’s the future of short sales? (may require free registration).

In a related story, see The Tampa Tribune: Tax 'Mess' Muddles Short Sales Of Homes.

(1) Are any other states having this problem?