California Real Estate Practice Exam

What would be the documentary tax stamps for a property selling for $121,000, with a down payment of $10,000, an additional $5,000 down, and an existing VA first loan of $100,000 being taken over?

1. $1.10

2. $133.10

3. $23.10

4. $5.50

The correct answer is: $1.10

To determine the documentary tax stamps for the property, we need to focus on the amount that is subject to the tax. In California, documentary transfer taxes are typically calculated on the purchase price of the property minus any existing encumbrances that are being assumed by the buyer (in this case, the existing VA first loan). In this scenario, the property is selling for $121,000, and the buyer is taking over an existing VA loan of $100,000. The amount subject to the documentary transfer tax would therefore be the sale price minus the amount of the existing loan. This gives us the following calculation: 1. Sale Price: $121,000 2. Existing VA Loan: $100,000 3. Amount subject to documentary transfer tax: $121,000 - $100,000 = $21,000 Now, the documentary tax rate in California is generally $1.10 per $1,000 of the sale price. Thus, we would calculate the tax due on the $21,000 as follows: - $21,000 ÷ $1,000 = 21 - 21 x $1.10 = $23.10 So, the correct answer regarding the documentary tax stamps based