​Calculating Property Taxes

Learn How to Estimate Property Taxes

​Although the calculation of the property taxes is a fairly simple math there are a significant misunderstanding and confusion among homeowners and even real estate professionals. The purpose of this article is to streamline the process and take the myths out of understanding the property taxes.

Previous Owners’ Taxes

This is the first step where most of the confusions begins. Rule number one is not to even look at how much property taxes the previous owners are paying unless they purchased the house in the same tax year and have not applied any exemptions to their property taxes. The reason for this is the recalculation and adjustment of the Assessed Value upon purchase of a home by the county.

Assessed Value and Market Value

Assessed Value is a dollar value used solely for calculating the property taxes and set normally by the property appraiser office in your jurisdiction. The assessed value is not the same as the appraised value, market value or the purchase price. Based on the jurisdiction, the Assessed Value is around 90% or 80% of the Market Value. For Example, if the Market Value of a property is $100,000 the property taxes are calculated based on 80% of Market Value or $80,000. Most websites for Property Appraiser’s Offices offer an online Tax Estimator tool, which estimates the new taxes for the property you are purchasing. Check with your local Appraiser Office’s website in your county for the availability of this tool.

Millage Rate

Millage is similar to a tax rate and set by Board of Commissioners, School Boards and other agencies who have the authority to levy taxes. Each Mill is equal to $1 per $1,000 of the Assessed Value. To calculate the property taxes, the Assessed Value is simply multiplied by the Assessed Value. In the example above, if the Millage is 2.

Homestead Exemption

The Homestead Exemption aoolies to all primary residence in the State of Florida. While some states offer this exemption only to older citizens the Homestead Exemption applies to everyone in Florida. It is very important to know other benefits of a property which is qualified as a homestead. The Homestead Properties are immune from the forced sales imposed by some creditors but not all. All judgment liens resulting from litigation for negligence of the homeowner or for breach of contract are protected by homestead laws. The liens on non-homestead properties, however, are fully enforceable in the State of Florida.

The liens which are voluntarily put in place by homeowners are not protected by Homestead laws. These liens include the mortgage, taxes, and liens due to non-payment of debt for repairs or improvement of the property are some example of the liens not exempt from creditor from claims against the property.

In addition to Florida residency, there are other requirements such as the ownership and occupancy and the location and sise of a property to qualify as a homestead. There is no limit on the value of the property to qualify for homestead. This has made Florida a haven for people with large assets and debts arising from lawsuits, They can easily transfer an unlimited amount of money to purchase a homestead property and will be automatically shielded from in-state or out-of-state judgments. Many famous people like OJ Simpson and Burt Reynolds have used Florida Homestead Laws to their benefit by purchasing high-priced homestead homes. The amount of Homestead Exemption is up to $50,000 for married couple and $25,000 for individual qualified homeowners.