Frequently buyers ask me what a home's property taxes are. This information is all but useless. After a sale, the property taxes on a home in Florida always change. In a very few cases they decrease. However, for most people, they go up. There are several reasons for this.
If the home is brand new, the previous year's taxes may have been calculated on just the vacant lot, which obviously is worth less than a lot with a home on it. For example, if the lot by itself had property tax charges of $300 for 2005, and the building on it had not been completed until November of the same year, the taxes that would appear on the tax rolls and the Multiple Listing Service data sheet would still be $300. When the new year began, the new tax assessment and the corresponding property taxes would dramatically increase since now the lot AND the house on it would be used to determine the value of the property for tax purposes.
Another reason that taxes can change is an alteration of the property's homestead status. Here in Florida we have exemptions we can claim if a home is our permanent residence. The best known is the Homestead Exemption. This exemption allows us to decrease our home's assessment by $25,000. There are also other exemptions for low income senior citizens, diasbled citizens and veterans, etc. If the seller has one or more of these exemptions and you, as the buyer, cannot claim them, your property's assessment and your property taxes will go up. Of course, the reverse can also take place. If the seller has no exemptions (perhaps the property is a vacation home or a rental property), and you CAN claim one or more exemptions, then your property taxes might actually go down a bit or increase only slightly since your assessment will be lower than it would be if no exemptions could be applied.
A third reason property taxes can take a hike is due to the fact that here we also have a law called "Save Our Homes". As long as our homes are homesteaded, each year their assessments can only increase 3% or the consumer price index, whichever is less. Even though true appreciation of a home might be 25% per year, the home's assessment can ony go up about 3%. Little-by-little the difference between what the seller is assessed and the true assessment of the property will grow! However, once a homesteaded property is sold, its assessment will rise to its real level at the beginning of the next year. If a seller has lived in a home for many years, the difference between what they were assessed and what a new buyer will be assessed can be huge, sometimes several thousand dollars. To add salt to the wound, the new assessment will probably go even higher since the county property appraiser will look at the home's sales price, and in all likelihood boost the value of your home even more based on its appreciation.
Even if the assessment stayed the same (highly unlikely) your tax bill could still change due to a modification of the millage rates. For more information on millage and how it works, see my previous post in this Property Taxes category.
The newest version of our contracts furnished by the Florida Association of REALTORS (FAR) now reminds buyers that they should not rely at all on a property's current tax levy. It states that they should expect that the taxes that they will be required to pay will be different. Maybe lower, but probably higher.
Most county property appraiser websites have tax calculators for your use. These can help you get an estimate of future taxes. You can find links to these sites by going to my webpage at: www.jelwell.century21bnr.com and clicking on the menu button for the County Property Appraisers. You will also see contact information for each appraiser's office. They will be glad to assist you and answer your property tax questions.
John Elwell - REALTOR
Bill Nye Realty, Inc.
Licensed in Florida