Florida Homestead Exemption, Portability, MLS Listings and more!
When you’re looking at a listing for property and look at the Pasco county property tax, Hillsborough or Pinellas Property taxes, you’re going to see an estimate (at best) of Property taxes that will be due each year. But that’s absolutely NOT the whole story. Why do property taxes for two houses in the same neighborhood vary so much? Why are the property taxes on MLS in Tampa Bay so wrong? Stay tuned. I’ll explain why.
If you’re one of the many people who downsize a home, or retire to Tampa Bay, there are things to consider long before making the move, so that everything goes smoothly. Be prepared for Florida life.
There are plenty of people involved in a real estate transaction and I bet you never thought about the local property appraiser’s role! With 17 years of experience, one thing we always tell my clients is that the property taxes you see on the listing is UNLIKELY to be what you’ll pay. If you’ve owned homes in another state, at first glance, you might think that Tampa Bay property taxes are exorbitant. Other people feel they’re pretty fair though, because we don’t have state income tax.
It’s no surprise, that our governments do require money to operate. As a result, our property taxes are an important source of revenue in Florida’s property tax system.
Truth in Millage Statements- TRIM Notice.
The county property appraisers assess all real property in the county as of January 1st, each year. And it’s based on sales the full prior (calendar) year. So for example, the Pasco county property appraiser sends in the mail, an annual notice of the proposed property taxes in August to every property owner. Now that’s called a Truth In Millage Notice a “TRIM” notice. It’s not the bill, so you’re not paying anything right then. It’s an estimate of the property taxes based on the proposed tax rate, your property value and any exemptions that you’ve got, and it will become due later in the year.
Meanwhile, the local governments such as Tampa are busy determining their annual budgets for the following year, which then allows the Hillsborough county tax collector to send you an actual bill in late October or November. Everyone who owns a property is then paying their actual share of the budget.
Every parcel of real property has a: * Just Value. That’s basically the market value of the property.
* Assessed Value, which is that Just Value minus any assessment limitations (and stay tuned will get to those various exemptions and the Save Our Home- SOH -section in a minute).
* Taxable Value. The taxable value is the assessed value minus the exemptions. That’s the value the tax collector users to calculate the taxes due.
Homestead Exemption
Why do houses have different taxable values in Florida? It’s because we have a number of exemptions, but the chief one among them is the Homestead Exemption. So a Homestead is a person’s legal primary residence, and there’s some criteria to establish a Homestead, mainly being resident in Florida with this as your primary home. So the taxable value of property with the Homestead exemption in Florida is going to be typically lower than the market value. The Homestead Exemption entitles you to a discount off the taxable value of your property of about $50,000. That actually saves you somewhere between $500 and $800 a year off your actual property tax bill.
What’s the Save Our Homes (SOH) Cap?
After you’ve claimed homestead exemption, and in addition to it, Florida then caps the amount that your taxable value can go up each year. It’s capped to 3% of the taxable value or the rate of the Consumer Price Index, whichever is LOWER. (The SAVE OUR HOMES Cap). If you own a home, you accumulate that difference between the tax assessed value and the market value, and it can make that huge difference. You’re seeing that on the listings, when you see a property that’s been owned by the same home owner for a long time. It just helps homeowners not be blindsided by massive tax increases when property values go up. And isn’t that what we’ve just seen?
If you had the Save Our Homes benefit on your former residence, and you’re thinking of moving. Did you know you can also transfer that to your new residence. This is called Portability and you DO need to apply for portability.
What if I don’t have a homestead? What if my property there is a second home? Don’t panic. We’ve got you covered there as well. And we’ll talk about that when we get to the chapter on the 10% cap.
How do Personal Exemptions Affect Florida Property Taxes?
One of the other reasons the taxes may be way off (On the MLS Listing) is any one of the other personal exemptions that will provide discounts, being included, such as: being disabled, being a widow or a widower active duty military, or a disabled veteran. In some cases, a disability for a veteran can mean the total removal of the Ad Valorem taxes and the listing might actually state zero taxes!
MLS Listings and Property Taxes, an Example.
Let’s jump on and look at a listing, and give you an idea about how the property taxes play out. Let’s suppose, for example, you’re considering buying a property in one of the best neighborhoods in Odessa, which is Starkey Ranch. So then let’s take a look at this property. Now, the homeowner’s taxes in 2020 were $6,318, but in 2021, that home was sold to a veteran who made it their homestead. The taxes dropped to $2,989. Now it’s for sale again, it’s listed at $672,000. The Pasco Property Appraisers website shows that the total taxes will be $11,121.
What about Non Ad-valorem Taxes, CDD’s and Millage rates??
You also need to understand a couple of other things in the tax world. Non ad valorem taxes, CDD fees, and Millage rates. So non-ad valorem taxes are mostly for things like garbage collection, mosquito spraying, stuff like that. They aren’t typically large amounts- many often about a few hundred dollars a year.
The CDD there is a Community Development District. That’s a special taxing district that funds infrastructure improvements in newer developments like Starkey Ranch or Bexley’s Del Webb. And that can be several thousand dollars a year. You might want to check out our earlier video on CDD’s for that. Property taxes on MLS in Tampa Bay include all these fees typically.
The Millage rate is the tax rate that set each year by each municipality. The millage rate is per thousand dollars of assessed property value. So for example, if a property you’re considering has an assessment of $275,000, and the Millage rate is 20 Mills, your property taxes would be about $5,500 a year.
Sitting Pretty!
You know, if you bought a home in Tampa Bay before prices went up, my gosh right now, you’re one of the lucky group of homeowners. You’ve got a low purchase price. You’ve got the best interest rates, and you’ve got those low property taxes. But what we know though is life still happens. People are still moving and today’s situation will be envied by future buyers and sellers, don’t you think?
What about non-homestead properties?
Great question. Well, the 10% cap applies to them. Florida created a permanent constitutional amendment in 2019 to give you some protection too. And it limits the assessed value of non-homestead property to know more than 10% each year. It helps slow down that massive increase in tax rates. Any non-homestead property, like second homes, residential and commercial rental property, vacant land automatically qualifies for the non-homestead cap, but it doesn’t apply to school district taxes. This is so that schools aren’t adversely affected by the cap’s existence. The benefit’s automatically applied to non-homestead property in the year after purchase or change of ownership. It also gets removed automatically when there’s a change in ownership or a change in use. Property taxes on MLS in Tampa Bay may not reflect that upcoming change at all!
Property Tax Estimators online.
Well, there’s good news about taxes and mortgages, and that is all in all, it’s still cheaper to own a home than it is to rent. If you’ve looked at rental costs in Tampa bay recently, you know what I’m talking about. Online, you can use a property tax estimator or calculator to get a much more accurate estimate of what your property taxes will be on a new home. And this is especially helpful if you’re looking to buy a home in Florida, because most counties have got this calculator on their website, and it’s going to reflect those various millage rates. It’ll give you a good estimate, but did you know you can also call the property appraisers office to nail it down further?
Let us know in the comments, hopefully this explains why the property taxes on the MLS in Tampa Bay are so “wrong!” If you’ve got any other questions about property taxes in Florida or real estate in general, we’d love to hear from you.
