Florida Property Tax Tips
Florida Property Taxes Add Up
We are a Florida mortgage company. Our Florida customers regularly ask us what they should expect from their future tax bill and how the homestead exemption works. As property values in Florida have moved upwards in the last decade property taxes have become more important than ever to understand.
Your New Florida Taxes
Florida is a great place to live. Whether you are moving here for the first time or relocating within the state property taxes should be understood. After you purchase your new home it will be reassessed for tax purposes. You should consider checking with the local City Hall for an estimate of your future tax bill.
What to Expect
If you go to City Hall to get an estimate of your future property taxes you will likely be told to expect an annual tax bill between 1.5% and 2.0% of your purchase price. Florida counties are allowed to tax property for as much as 3% of the value. Ask questions. Know what to expect.
Florida Homestead Exemption Rules
The Florida property tax homestead exemption reduces the taxable value of your homesteaded property by $25,000 for property tax calculations. These days the Florida homestead exemption is less likely to have a significant impact on your tax bill as property values have surged over the recent decade. If you pay $500,000 for your home and get a $25,000 homestead exemption your savings do not add up to a significant percentage of your potential tax bill. But that does not mean that you should not bother filing for your homestead exemption!
Florida Tax Increase Caps
More importantly, the Florida homestead exemption limits the rate at which your property taxes can be increased. The millage rates can be changed - which would represent an across the board adjustment effecting everyone. But once your home is homesteaded the amount that your assessed value can be increased by is fixed.
This rule was enacted in the “Save Our Homes” Amendment to the Florida Constitution and went into effect in 1995. The amendment limits the increase of the assessed value of a home with a homestead exemption to the lesser of 3% or the rate of inflation. So file for your homestead exemption.
Primary Home Only
The Florida Homestead exemption is only for your primary home. This exemption does not apply to rental properties, or vacation homes. At this time the homestead is not transportable. This means that you do not get to carry your current assessed value with you to your next home. When you buy a new home you "restart the clock" and will have to pay taxes on the full value of our new home.
When to file
Generally, initial application for property tax exemption must be made between January 1 and March 1 of the year for which the exemption is sought. Initial application should be made in person at the Property Appraiser's office. Please check with your local City Hall for specifics.
The Future
There is an open dialog in process that may change the substance of the homestead exemption rules in the coming years. This dialog has been triggered by the surge in Florida real estate values in recent years which has simultaneously reduced the liquidity of real estate by creating barriers to home purchases, and making it difficult for many people to move from their current home into a new home with potentially higher and unaffordable taxes.
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