Long sandy beaches and turquoise waters lure new homeowners to Florida every year. The state receives a variety of property owners from rental buyers to retirees. In 2017, 116.5 million visitors came to the Sunshine State, a 3.6% increase from 2016. More visitors mean more people wanting to buy.
If you’re navigating Florida property taxes for the first time, here’s what to expect.
Florida is one of seven states with zero income tax. In addition to the warm weather, this is another reason why newcomers flock to the state. But this comes at a price – residents are required to pay corporate taxes (5.5 percent), sales taxes (6 percent) and property taxes. After New York and California, Florida collected the third most tax of any state because of its staggering sales tax rates.
Florida is ranked 25th in terms of highest property tax rate in the United States. On average, a Florida homeowner pays $1,702 annually in property taxes, although this rate is drastically different in certain regions of the state.
Counties with the lowest tax rate are located in the panhandle; Dixie, Washington and Franklin County. The counties with the highest rate are more south like Palm Beach, Miami-Dade, Lee and St. John County. These southern counties have slightly higher tax rates than the national average.
One reason the property taxes alter significantly within Florida is because each county has its own appraiser. Every lot in each county has to be annually appraised, but generally the elected official will mass appraise multiple properties at once using market data.
After the appraisal, each landowner is given their annual Truth in Millage (TRIM) notice that declares the home’s value. Homeowners should always review this claim because if the appraisal is too high, you can file an appeal and pay less in taxes.
Property tax rates are determined by the assessed value of a Florida home. This includes any changes after the annual appraisal, and also considers possible exemptions applied by the Save Our Homes Program.
In response to a growing number of rental property owners, this homestead exemption was passed to limit annual property tax increases to 3% for permanent residents. Homeowners who live in houses, condos, or apartments can claim up to $50,000 on their primary residence, which can reduce the taxable value of a property by up to $25,000-$50,000 for a married couple.
There are also property tax exemptions for senior citizens, veterans and the disabled.
How is Florida property tax calculated? The assessment differential and exemptions (Save Our Homes) is subtracted from the market value of the home. This is then multiplied by the millage rate (1/10th of a percent in Florida) to total the tax liability.
Florida’s 1 mill rate is pretty low compared to other states. Just north in Georgia, the average mill rate is 30. Counties, school boards, and special districts can also levy taxes. Such collections are varied by county.
Home-improvement projects and adding square footage to your home will raise the property taxes after the next reassessment. Another factor is an increase in home sales in the neighborhood. Since more visitors keep coming to Florida, this could mean more property sales and an overall increase in property tax.
If you are a new homeowner, you also have to consider a supplemental tax. This is the difference between the old assessed value and the new assessed value, meaning if big changes were implemented to the house before the final sale, you’ll have to pay a significant difference. Fortunately this is a one-off fee that won’t affect your property tax.
Between 2015 and 2016, total government spending in Florida increased by $7.4 billion. Eighty percent of total tax revenues came from sales tax. Most of the state’s tax dollars go to Medicaid (30 percent) followed by education (26 percent). Other expenditures include public transportation, public health programs, and economic development.
In general, Florida taxes are pretty relaxed compared to other states. Sales taxes are the biggest burden, but property taxes are level to the national average. As long as you become a permanent resident at your new home, you’ll also reap the benefit of homestead exemptions. Keep in mind Florida tourism and home purchasing rates are increasing, which can always influence higher tax rates.