What are documentary stamps used for?

Documentary stamps serve a specific function in the context of property transactions, primarily related to taxation. They are required as a means of demonstrating that the appropriate taxes have been paid on certain documents involved in property transfers. This tax is typically calculated based on the value of the property being transferred, and the purchase or sale transaction cannot be finalized without the payment of these documentary stamp taxes.

When a property is being sold or transferred, documentary stamps act as a form of proof that tax obligations have been met, ensuring compliance with local or state regulations. This process is important for legal and financial reasons, as it shields against tax evasion and supports the recording of transactions in a legal framework.

Other choices do not accurately reflect the primary purpose of documentary stamps. Certifying a will, representing stock ownership, or validating a mortgage agreement involve different legal documents and processes that do not pertain to the specific function of documentary stamps in property taxation.