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Taxes Should Be Paid On Transaction Price In State's Short Sales

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By SHANNON BEHNKEN

The Tampa Tribune

Published: September 24, 2008

TAMPA - The confusion over state tax law that threatened to bottleneck home sales throughout the state has been resolved.

The Florida Department of Revenue said Tuesday that real estate "document stamp" taxes should be paid on the transaction price of short sales, not the higher value of the mortgage.

The Florida statute was unclear when it came to short sales - a popular strategy some troubled owners can take to sell their homes for less than the mortgage. Some title companies throughout the state had begun to charge taxes on the higher amount, causing much concern among sellers and real estate agents.

"We're excited and glad the issue has been resolved rather quickly," said Trey Price, public policy representative for the Florida Association of Realtors. "This could have caused a real nightmare for people trying to sell their homes through this method."

At stake was millions of dollars in lost taxes for a state government struggling under a poor economy and higher costs faced by lenders trying to dispose of the homes.

In August, when the question of how to tax short sales came to light, title agencies and real estate lawyers said short sales were stacking up at closing tables because real estate professionals were uncertain what to do.

Florida is second in the nation in foreclosures, so any slowdown in clearing poor-performing real estate means prolonging the state's housing market slump.

The pace of short sales has boomed since last year, spawning real estate professionals who concentrate on short sales. Although no one tracks the number of short sales, almost 20 percent of the 16,677 homes in the Hillsborough County area listed with real estate agents in August were for short sales or for properties undergoing foreclosure, the Greater Tampa Association of Realtors said.

Reporter Shannon Behnken can be reached at (813) 259-7804 or sbehnken@tampatrib.com.

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