How Do Property Taxes Work in Southwest Florida?
When people are browsing Southwest Florida real estate listings on sagerealtor.com or looking at listing reports, they see a tax figure in the listing detail. That tax figure is what the current owner is paying, not what the next (new) owner will pay. In essence, it’s a useless piece of information.
This article provides an overview of how Southwest Florida property taxes are calculated.
Property Appraiser Valuation
The county property appraiser’s office determines market value on an annual basis. The county re-values the property in part based on the selling price. Other factors such as recent sales in the neighborhood, improvements, and replacement cost are also considered.
Bear in mind that assessed market value and the mil rate ($1 for every $1,000 of value) are not the same when determining the amount of tax owed. City councils and managers set the mil rate on an annual basis. In the example below, the mil rate is shown for each entity.
Bear in mind also that Florida does not have a state income tax. So when you look at a residential tax bill, that’s it. That’s what you pay.
Homestead Exemptions
Homesteaders have the option to take a homestead reduction, which reduces the assessed value. Possible exemptions that decrease the taxable value are primarily homestead (resident 6 months per year or more).
The Homestead Exemption is a benefit of up to a $50,000 removed from the assessed value of the property. Additional exemptions may be available to veterans, widows, seniors, and those with disabilities.
When a property changes ownership, any exemptions or other benefits the seller had in place are removed on January 1. The new owner, if homesteading, applies for exemptions by March 1st of the year they purchased (if closed Jan 1 – Feb 28) or by March 1st of the following year if they closed after March 1st of the current year.
How to Calculate Your Property Tax Amount
Mileage rates vary by city and location, but in general using a 1.9% figure will be close enough for budgeting. Multiply your purchase price by the mileage rate. For example:
Purchase Price: $200,000 * 1.9% = $3,800 annual property tax
The taxes are all inclusive, meaning school levies, wastewater, libraries, and so forth are included when using this formula. In some areas of the country, states or counties have several levies. For example, one for property tax, one for schools, one for law enforcement. Here, it’s collected by the county on one bill and then dispersed to the agencies and city.
If you will be homesteading, the base value is reduced by the exemptions (e.g., 150,000 * 1.9% = 2,850).
When are Tax Payments Due?
Florida property taxes are paid in arrears. The tax bill for the current year goes out in November of the current year. Taxes can be paid anytime from November to February, with discounts applied for paying “early.” For example, there is a 4% discount for paying right away in November.
If taxes are escrowed with the lender as part of the mortgage payment, the lender handles the tax payment and there is nothing for the owner to do.
What is “Save our Homes?”
The Save our Homes provision places a limitation of 3% on annual assessment increases on Homestead properties. When a Homestead property sells, the assessed value returns to the fair market value in the year following the sale. That fair market value assessment then becomes the base value for “Save Our Homes” purposes for the new owner/homestead applicant.
What is Portability?
The Florida homestead exemption Save Our Homes includes a portability provision, allowing homesteaders to take with them some or all of your old home’s “Save Our Homes” benefit to a new home.
The idea behind this is the homesteader has built up “savings” via the 3% per year cap. When buying a new home, because the value resets, it would mean a substantially larger tax bill. The portability provision is meant to make transitions (downsizing for example) easier for the homesteader.
Annual Caps on Market Value Increases
And Answering the Question “Do Snowbirds Pay More Tax?”
Properties owned by part-time residents –whether from Minnesota, Ohio, Colorado, Canada, or Germany – are valued by the appraiser identically.
There is no difference in property appraiser valuation for snowbirds, no matter where they fly from. The tax rate (the mil rate) is the same for all residential property owners and the methods for assessing taxable value also are the same across the board.
Here’s the key difference between homesteaders and non-homesteaders (part time residents):
•Homesteaders have an annual cap of 3% on the property’s taxable assessed value.
•Non-homesteaders have an annual cap of 10% on the property’s taxable assessed value.
So when the market turns and property values increase, there is a limit to how much the property appraiser can increase the assessed value. If the property were to increase 15% in value in one year, the taxable assessed value can only be increased 3% (homesteaded) or 10% (non-homestead).