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Florida Property Taxes: A Quick Introduction For New Owners

By Christopher Carter - Real Estate Broker Associate

November 17, 2023

Now that it is November, Florida Property Taxes can start being paid, with full payment for the Annual Tax Bill you just received due by March 31st, 2024. You will receive variable discounts for paying them anytime between now and the end of March: November - 4% discount, December - 3%, January - 2%, February - 1%, and March - no discount. Property Taxes are paid in arrears, which means that the TRIM (Truth In Millage) notice you received in late August and the Property Tax Bill you recently received are for the current year that started last January 1st.

Real Estate Property Taxes are paid to the taxing authority in which the property is located. This is because the local municipality directly provides the services that benefit all property owners.

Property Taxes pay for Municipal Services that can include:

• Local Government Administration and Operation
• Public Road Maintenance, Street Lighting
• School District Staff, Administration and Buildings
• Water Management Districts
• Police and Fire Departments, other First Responder Services
• Trash and Recycling Pickup
• Other Costs of Operating and Maintaining Public Infrastructure

The majority of Property Tax Line Items are Ad Valorem, which means they are calculated on the current value of the property. Properties of higher value end up paying more in Property Taxes, lower-valued properties pay less in taxes. The current Assessed Value of the property is multiplied by a Millage Rate in order to get the amount of Tax due. The Millage Rate represents each property owner's portion of the costs for providing services like the ones mentioned above.

Assessed Value (less any exemptions) X Millage Rate = Annual Property Tax Due

Every year, as properties are sold and change owners, the County's Property Appraiser's Office re-establishes all properties' Assessed Value, which is based on the most recent sale prices and local market factors. Assessed values are adjusted annually to include neighborhood and community sales trends in addition to individual property specifics.

The County Appraiser's Office does not send out Tax Bills. They provide each property's Assessed Value to the County Tax Collector who (as the name implies) mails bills to property owners and collects the Tax amount.

It is fairly safe to say that the new Assessed Value for a property that was sold in the past year will be pretty close to its recent purchase price. When a property changes owners, the Appraiser's Office is required to remove any exemptions (like Homestead) the previous owner had, and reassess the property to its Just Value (Market Value). These adjustments become effective for the next tax year.

County Appraiser's Offices don't only wait for an individual property to sell before they reconsider its value for Tax purposes. Each year they look at local Real Estate Market trends and neighborhood sales prices to arrive at Assessed Values that will apply to all houses, condos, and undeveloped lots in the County even if a specific one has not changed owners recently.

Updates, upgrades, and renovations also add to a property's Assessed Value. Through Permit Applications filed with the Building Department, the Appraiser's Office stays current on improvements and additions made to specific properties. Properties undergoing major renovation, as well as new construction in your neighborhood or community can factor into the Assessed Value for all nearby properties.

When a house or condo is sold, that Tax year's Property Taxes are prorated between seller and buyer according to their closing date. In Florida, the Property Tax year is the calendar year. Sellers are responsible for paying the Taxes for their time of ownership, buyers will owe from the closing date forward.

When closing occurs before the seller has paid that year's Property Taxes, the Closing Title Company or Attorney charges the seller for Taxes owed from January 1st up to the closing date. That seller's portion of Property Taxes is credited to the buyer, who is then responsible for paying the entire bill when it comes due later in the year.

Important for buyers in the above scenario - when you receive the Full Purchase-Year Tax Bill, remember that you have already received the seller's portion of the Property Taxes!

When closing occurs after the seller has already paid the entire year's Property Taxes (some November and December closings), the seller will receive a credit at closing from the buyer for the days remaining after the closing date through the end of the year. The buyer reimburses the seller for having already paid the entire Tax Bill which included the buyer's portion of Property Taxes.

Property Tax Debt and Liability attach to the property, not the owner. Whoever owns the property is responsible for paying the bill. Unpaid Property Taxes will result in a Municipal Lien against the property, which means it cannot be sold until someone (it doesn't matter who) pays the Taxes.

That's it for now. I am keeping this edition on the shorter side because there are additional parts of the Florida Property Tax discussion to address in an upcoming edition.

These include:

• Escrowing for Property Taxes with Mortgage Financing
• Florida Homestead Exemptions for Permanent Residents
• New buyer "sticker shock" on the Re-Assessed Value and Tax Bill
• TRIM Notices
• Petitioning the Value Adjustment Board to modify Assessed Value

Watch for a follow-up edition on these in the next few weeks...

Editor's Note: Christopher Carter is NOT an attorney. He does not give legal advice. For interpretation and application to specific circumstances of anything you read in this article, you must speak with a Florida-Licensed attorney.

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