Florida Computations and Closing Practice Questions and Answers
Real estate computations and closing of transactions is about 6 questions of math on the Florida sales associate exam. No formulas are given on test day. It covers commission, documentary stamp and intangible tax, proration, area, the income approach, loan-to-value, and property tax. Work the questions below, then read every explanation.
Exam prep only
Math questions are not hard arithmetic. They are hard because you have to choose the right formula and the right number before you compute. Set up the formula first, then plug in.
Use The Setup-Before-Solve Rule. Write the formula, identify which number the question gives you, then calculate. Most wrong answers are real results from the wrong setup, such as using the deed rate on a note or forgetting to round.
The questions below cover what the exam repeats: commission splits, the documentary stamp tax on deeds ($0.70 per $100) and notes ($0.35 per $100), the nonrecurring intangible tax ($0.002 on the mortgage), proration of taxes and prepaid items, area and acreage conversions, loan-to-value and down payment, property tax with the millage rate, and the income approach to value.
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Computations and Closing Practice Questions
10 scenario-based questions on computations and closing, scored, each with a full explanation after you answer. Every question is also written out below if you would rather study at your own pace.
Every question explained
Prefer to study at your own pace? Here are all 10 questions. Read each one and pick your answer, then reveal the correct answer, the reasoning, and the trap that catches most candidates.
1. A home sells for $420,000 at a 6 percent total commission. The listing and selling brokerages split the commission equally, and the listing agent receives 60 percent of her brokerage's share. How much does the listing agent earn?
- A.$7,560
- B.$12,600
- C.$15,120
- D.$25,200
Show answer and explanation
Correct answer: A. $7,560
Why A is correct: Total commission is 420,000 times 0.06, which is $25,200. The listing brokerage's equal half is $12,600. The listing agent's 60 percent share is 12,600 times 0.60, which is $7,560.
Trap: Read what the question asks for. 25,200 is the total, 12,600 is the brokerage's half, and 15,120 would be 60 percent of the whole commission. The agent's share is 7,560.
Source: Real estate math, commission
2. A deed conveys an Orange County property for $352,150. Documentary stamp tax on a deed is $0.70 per 100, and the consideration rounds up to the next 100. The deed tax is
- A.$2,465.05
- B.$2,465.40
- C.$1,232.70
- D.$246.54
Show answer and explanation
Correct answer: B. $2,465.40
Why B is correct: Round 352,150 up to the next 100, which is 352,200. Divide by 100 to get 3,522 units. Multiply by 0.70 to get $2,465.40.
Trap: The unrounded figure 352,150 times 0.007 gives 2,465.05, which skips the round-up rule. Using the note rate of 0.35 gives 1,232.70. The deed answer is 2,465.40.
Source: F.S. 201.02, documentary stamp tax on deeds
3. A buyer signs a promissory note for $280,000. Documentary stamp tax on a note is $0.35 per 100. The note tax is
- A.$1,960
- B.$560
- C.$980
- D.$2,800
Show answer and explanation
Correct answer: C. $980
Why C is correct: Divide 280,000 by 100 to get 2,800 units, then multiply by 0.35 to get $980.
Trap: Using the deed rate of 0.70 gives 1,960, which is double the correct note tax. The note rate is 0.35 per 100.
Source: F.S. 201.08, documentary stamp tax on notes
4. A new mortgage secures $280,000 of debt on Florida real property. The nonrecurring intangible tax is 2 mills, or 0.002. The intangible tax is
- A.$980
- B.$560
- C.$1,960
- D.$5,600
Show answer and explanation
Correct answer: B. $560
Why B is correct: Multiply the exact loan amount by 0.002: 280,000 times 0.002 equals $560. The intangible tax uses the exact amount with no rounding to the next 100.
Trap: Do not round for intangible tax, and do not use the 0.35 note rate. The intangible tax is 0.002 times the loan, which is 560.
Source: F.S. 199, nonrecurring intangible tax
5. Annual property taxes are $3,650, paid in arrears. A sale closes on June 30 of a non-leap year, the seller owns the day of closing, and a 365-day year is used. The seller's share, charged as a debit to the seller, is
- A.$1,825
- B.$1,800
- C.$1,810
- D.$1,840
Show answer and explanation
Correct answer: C. $1,810
Why C is correct: The daily rate is 3,650 divided by 365, which is $10 per day. From January 1 through June 30 in a non-leap year is 181 days. Multiply 181 by 10 to get $1,810 owed by the seller.
Trap: Half of 3,650 is 1,825, but the period is not exactly half a year. The correct day count from January 1 through June 30 is 181 days, giving 1,810.
Source: Real estate math, proration
6. A rectangular commercial lot measures 150 feet by 200 feet. At $12 per square foot, the lot is worth
- A.$4,200
- B.$30,000
- C.$360,000
- D.$43,560
Show answer and explanation
Correct answer: C. $360,000
Why C is correct: Area is length times width: 150 times 200 equals 30,000 square feet. Multiply by $12 per square foot to get $360,000.
Trap: Add the sides and you get 350, which is wrong. Area is length times width, not the perimeter.
Source: Real estate math, area
7. An office building produces net operating income of $84,000 per year, and investors require a 7 percent capitalization rate. Using the income approach, the value is
- A.$588,000
- B.$1,000,000
- C.$1,200,000
- D.$5,880
Show answer and explanation
Correct answer: C. $1,200,000
Why C is correct: Value equals net operating income divided by the cap rate: 84,000 divided by 0.07 equals $1,200,000.
Trap: Divide by the cap rate, do not multiply. Multiplying 84,000 by 0.07 gives 5,880, which is not a value.
Source: Real estate math, income approach
8. A property is appraised at $300,000 and has a contract price of $310,000. The lender makes an 80 percent loan based on the lower of value or price. The maximum loan amount is
- A.$248,000
- B.$240,000
- C.$300,000
- D.$60,000
Show answer and explanation
Correct answer: B. $240,000
Why B is correct: Lenders use the lower of the appraised value or the sale price. The lower figure is 300,000. Multiply by 0.80 to get a maximum loan of $240,000.
Trap: Do not use the higher contract price. 310,000 times 0.80 gives 248,000, but the lender uses the lower 300,000 value.
Source: Real estate math, loan-to-value
9. A homesteaded property has an assessed value of $285,000 and qualifies for the full $50,000 homestead exemption. Using a simplified 18-mill rate that applies to non-school taxes, the tax on that non-school portion is
- A.$5,130
- B.$4,230
- C.$4,275
- D.$235,000
Show answer and explanation
Correct answer: B. $4,230
Why B is correct: Subtract the exemption first: 285,000 minus 50,000 equals 235,000 taxable value. Then apply the millage: 235,000 times 18 divided by 1,000 equals $4,230. The full $50,000 applies here because the additional $25,000 homestead exemption counts against non-school taxes.
Trap: Subtract the exemption before applying the rate. Also note the extra $25,000 exemption does not reduce school taxes, so the taxable value for the school portion would be $260,000, not $235,000.
Source: F.S. 196.031, homestead exemption; millage math
10. A Florida home sells for $400,000. The seller pays a 6 percent commission, documentary stamp tax on the deed at $0.70 per 100, and a $1,200 title charge, and must pay off an existing $250,000 mortgage. Ignoring prorations, the seller's net proceeds are
- A.$122,000
- B.$124,800
- C.$123,400
- D.$372,000
Show answer and explanation
Correct answer: A. $122,000
Why A is correct: Add the seller's costs. Commission is 400,000 times 0.06, which is 24,000. Deed stamps are 400,000 divided by 100, times 0.70, which is 2,800. The title charge is 1,200, and the mortgage payoff is 250,000. Total costs are 278,000. Net proceeds are 400,000 minus 278,000, which is $122,000.
Trap: A multi-step closing problem punishes skipped lines. The most common misses are forgetting the mortgage payoff ($372,000) and using the note rate of 0.35 instead of the deed rate of 0.70 on the stamps ($123,400).
Source: Real estate math, seller net at closing
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Are formulas provided on the Florida real estate exam?+
No. The Florida sales associate exam does not provide formulas. You must know the commission, documentary stamp, intangible tax, proration, area, income approach, loan-to-value, and millage formulas and set them up yourself, then solve with the on-screen calculator.
How do you calculate Florida documentary stamp tax?+
On a deed, round the consideration up to the next 100, divide by 100, and multiply by 0.70. On a note or mortgage, divide the amount by 100 and multiply by 0.35. The intangible tax on a new mortgage is the exact loan amount times 0.002, with no rounding.
How many math questions are on the Florida exam?+
Real estate computations and closing of transactions is about 6 percent of the 100-question Florida sales associate exam, so expect roughly 6 math questions covering commission, taxes, proration, area, value, and loan calculations.
What is the documentary stamp tax rate in Florida?+
Documentary stamp tax on a deed is $0.70 per $100 of the sale price in most counties; Miami-Dade uses a different rate. Documentary stamp tax on a promissory note or mortgage is $0.35 per $100 of the loan amount. The taxable amount rounds up to the next full $100.
How do you calculate a real estate commission?+
Multiply the sale price by the commission rate to get the total commission, then apply the agreed split. For example, a $300,000 sale at 6 percent is $18,000 total; a 50/50 split between the listing and selling sides leaves $9,000 on each side before the associate's share.
What is the formula for loan-to-value?+
Loan-to-value equals the loan amount divided by the property's value or sale price, whichever is lower, times 100. A $240,000 loan on a $300,000 home is an 80 percent loan-to-value, the line above which private mortgage insurance is generally required.