Property Taxes 101: What Home Buyers Need to Know

Florida property taxes are assessed annually based on the value of your property as of January 1st of each year. The county property appraiser determines that value, and the tax bill is calculated by multiplying your property’s assessed value by the millage rate for your area.

The millage rate is essentially the tax rate expressed per $1,000 of assessed value. It varies by county and can vary within a county depending on what taxing districts your property falls under — school district, fire district, water management district, and so on. A millage rate of 15 on a $300,000 assessed value means a $4,500 annual tax bill.

Tax notices go out in November. If you pay by November 30th, you get a 4% discount. The discount steps down each month until the final deadline of March 31st. Most people with a mortgage never think about this because the lender collects it monthly through escrow and pays it automatically.

This is the one that catches people off guard more than anything else. When you purchase a property in Florida, the county property appraiser will reassess it at or near the purchase price. If the previous owner had been in the home for a long time, their assessed value may have been significantly lower than what you paid, thanks to a protection called Save Our Homes.

What that means in practice: the tax bill you see on the listing, or in the MLS, may be substantially lower than what you’ll actually pay after closing. The seller’s tax bill reflects their assessed value, which may have been capped for years. Your assessed value resets to market value when the property transfers to you.

If you buy a home in Florida and it will be your primary residence, you’re likely eligible for the homestead exemption. This reduces your assessed value by up to $50,000 for property tax purposes. On the first $25,000, the exemption applies to all taxing authorities. On the next $25,000, it applies to all except the school district millage.

The homestead exemption also triggers Save Our Homes protection, which caps annual increases to your assessed value at 3% per year or the rate of inflation, whichever is lower. This is what keeps long-term homeowners’ tax bills from rising dramatically even as market values climb.

To get the exemption, you need to apply with your county property appraiser’s office by March 1st of the year you want it to take effect. If you close on a home in October and don’t apply by March 1st of the following year, you’ll miss the exemption for that tax year.

Every county property appraiser in Florida has an online tax estimator tool. If you’re looking at a home in Seminole County, go to the Seminole County Property Appraiser’s website and use their estimator with the purchase price and your homestead status. Orange County, Osceola, Volusia, Lake, and Polk all have similar tools.

The number the estimator gives you will be more accurate for budgeting than whatever the current tax bill shows on the listing. This is something I walk my buyers through on any home we get serious about, because the difference can be meaningful for monthly payment calculations.

If you currently have a homestead in Florida and are buying a new primary residence in Florida, you may be able to transfer your accumulated Save Our Homes benefit to the new home. This is called portability.

The portable benefit is the difference between your current home’s market value and its assessed value. You can transfer up to $500,000 of that difference to reduce the assessed value of your new home. Portability doesn’t happen automatically. You apply for it through the property appraiser’s office when you file for homestead on the new property.