Guide to Florida Real Estate Taxes
When people who are looking to buy in Florida ask me about the taxes I like to share a little bit of humor. I say Florida has no state income tax, so they make up for it with real estate taxes and speeding tickets. Speeding tickets is the funny part. The real estate taxes, on the other hand, are not so funny for some.
The real estate taxes that you pay on a home can vary widely depending on what city and what county you are buying the home in. For example taxes in 2011 on a $250,000 home in Dade County (Miami area) could be $5188.29, and taxes on the same priced home in Sarasota County could be $3412.59.
Why the difference? Well, several factors are at work here, but the main thing is that the taxes will usually be higher in areas that are experiencing rapid population and housing growth. When rapid growth happens some local governments cannot provide the level of services expected of them without raising taxes. This usually happens because city governments didn’t anticipate the rapid growth and must then play catch-up. Had they foreseen the growth, it might be a different story.
They could have used the expanding tax base from more people moving into the area to increase the amount and level of services that would be needed such as building new roads and infrastructure, providing adequate schools, police, medical, and fire services, and hiring more public servants to oversee and run them.
Property Appraisal The property appraiser’s office has the task of putting a value on your home. This will help determine the amount of tax you will be required to pay. The property appraiser is not; however, the person who determines what your taxes will be. The local government does that when they set the millage rate.
Luckily, most of the time, you won’t pay taxes on the entire price of your home. In Florida, property appraisers have a duty to assess your home at “just value.” The typical property valuation is targeted between about 85-95 percent (but these are sometimes lower and sometimes higher) of what they think a particular property would sell for. If you just purchased a property, you are assessed at 85-95 percent of the amount you paid for it, that is, your contract price.
The property appraiser’s job involves figuring out a reasonable range of values that buyers would pay for a particular property. Property assessments are usually set at the lower end of that range, which is normally around 85 percent. This is a practice used in almost all Florida counties. You will have to check with the property appraiser’s office in the area you are considering to determine where in this range they prefer to target.
Many people wonder why the figures of 85-95 percent are used and not 100 percent. The lower figures are used to allow for closing costs, transfer taxes, and real estate commissions that may have been built into the final sales price but are not really part of the “value” in the home.
While the above information is good to know, in order to get the possible “worst-case scenario” idea of what your taxes will be, use the 100 percent value for your financial planning. Then when you get your tax bill, if it happens to be lower, you will hopefully be pleasantly surprised.
Millage Rate An essential element to figuring out how much your taxes will be is the millage rate, commonly referred to as “mil rate.” The millage rate is expresses as “mils per thousand.” For example if the millage rate is “22.55”, then you will pay $22.55 per $1,000 of assessed value.
Each taxing district will set its own millage rate which can be determined by dividing the total proposed budget of the taxing district (city, county, school district, etc.) by the total taxable value of all real estate in the district after exemptions are deducted for.
You will likely be taxed by your city, county, school district, water management district if there is one, and others. It’s important to get a whole tax picture view before deciding on an area. The local property appraiser’s office will usually be your best resource for this.
It is also important to note that real estate taxes in Florida are paid in arrears, and you will have an opportunity to get a small discount for paying them early.
For links to the property appraiser’s offices throughout Florida visit http://myflorida.com/dor/property/appraisers.html