Estimating Florida Property Taxes on Your Home Purchase

The Florida property tax system differs from many other states, and for you out of towners, understanding how to estimate the property tax on your Florida home can be confusing.

The simple formula for calculating taxes is:
(Assessed Value) X (Millage Rate) = Your Yearly Tax Bill.

Finding out a property Millage Rate (millage is just a fancy term for Tax) is relatively simple. All you have to do is go onto the counties property appraisers website and see what the number is. Typical properties throughout Central Florida have a millage rate of between 16 and 20 mils (most commonly 18 mils). The number of mills however must be converted into a percentage rate in order to plug into the above formula….to keep it simple just move the decimal place over ONE to the left. 16 mils is 1.6% and 20 mils is 2.0%. How’s that for making something very simple as complicated as it they can! (Remember I only said it was RELATIVELY simple.)

The confusion comes when you start looking at all the ways a properties assessed value can change.

Assessed value in its simplest definition is the value of the property. The county the property resides in determines the value of every property within its borders every January 1st (or at least they are supposed to). The guidelines to determine these values follow similarly to your run of the mill appraisal; taking into account size, location, upgrades, and recent comparable sales. From year to year your value can rise AND fall based on if you add onto the size of your home, build a pool, or a sink hole swallows your neighbor’s house. Now I mentioned before that the county is SUPPOSED to reassess your property every year as of January 1, but being as some counties have hundreds of thousands if not millions of parcels to assess, rarely is your one property re-evaluated every year. An automated system adjusts for value changes and the valuation work usually occurs in Sept, Oct, and Nov of the previous year. Since these re-assessments only change on January 1 of any year, the current owner’s tax bill is always at least 1 year or more behind in values. This is why if you are looking to purchase a house today you cannot trust the current owner’s tax bill.



For example, you find a house for sale at $200,000 and they say the last tax bill was $6,000 for 2008; this doesn’t seem right at 1.8% does it? Well in this case, the house was likely worth about 330,000 when the 2008 tax bill assessed values where figured out (likely in October of 2007). Since the property is now obviously only worth at most $200,000 (that is what you are paying for it after all) you have a pretty air-tight case that when your 2009 tax valuation rolls around you can’t be assessed at that same $330,000 value. You can estimate your new tax bill come January to be at most 200K x 1.8% or $3600. I say “at most” because in previous years the property appraisers office usually took the market value of the home and subtracted about 20% to arrive at their assessed values, now that the market has turned and budget short falls abound, I doubt you will be able to get your assessed value to less than 100% of market value….but you may get lucky

So that is how you estimate your
property taxes when purchasing a home here in Florida …..Oh wait, I almost forgot, here in Florida we also have something called a Homestead Exemption! There are several legal benefits to claiming a homestead, but we’ll only be talking about how it affects your property taxes. First thing is first, a homestead exemption can only by claimed on a Florida property if it is your primary residence (defined as you using the property as your residence for at least 6 months and 1 day of the year). The exemption has two large tax benefits, first being a $50,000 deduction from the assessed value of your home. So if your property is assessed at $200,000 but have it homesteaded, the millage rate will only be applied to a value of $150,000. At a 1.8% tax rate a homestead exemption will save you about $900. The second benefit of the homestead exemption is the “save our homes” tax benefit becomes effective. What save our homes basically is, is a cap placed on the amount your taxes can ever be raised in any one year. The cap is 3% a year, and is yet another reason why you cannot rely on the current owner’s tax bill as an estimate of what your taxes may be. If an owner purchased a property in 1985 and has had it homesteaded since then, their taxable value will likely be well below what would normally be assessed.

There is also a new aspect to Homestead Exemption with a “portability” benefit. Explaining portability in itself requires a new blog. But basically, if you acquire significant savings because of the 3% cap on taxes, you may actually be able to carry some of that savings to the next home you purchase.

To look up the most up to date tax bills on any property, to see what millage rates are effective on a property, and in some cases use an “estimate taxes” function, check out the local county property appraiser’s office (the office that determines assessed values).

Orange County – Orange County Property Appraiser's Office Home(www.ocpafl.org)
Seminole County – SCPA index.html
Osceola County - Osceola County Property Appraiser's Office
Polk County – Home Page

Added 9-3-09 - P.S. ALWAYS consult a Home Expert as the above is only meant to be a general guide of how the FL property tax systems work. CDD's, ad-valorem, and other special fee's can and will vary from property to property and are not always apparent just on the counties Property Appraisers website.