Thread: Property Tax
02-10-2006, 08:50 AM #1
When you purchase a property do the property taxes automatically increase to the value paid for property the next year or is their some other method used to assess the value? I have also heard there was some type of limitation on the amount taxes could be increased every few years. What is the deal?
Last edited by DuneDog; 02-10-2006 at 08:51 AM. Reason: sp
Re: Property TaxOriginally Posted by DuneDog
Florida has a "Save Our Homes Act" which states that property, homesteaded by the current owner for one year or more, cannot have the "Assessed Value" increase more than 3% per year. That doesn't prevent the millage rate, set by the County, from increasing more than 3% per year.
02-10-2006, 09:26 AM #3
Re: Property Tax
Thanks SJ, So if I understand this correctly, a homesteaded property will not increase to the purchase price paid. It can only go up to a certain limit and then a percentage every year thereafter.
02-10-2006, 10:09 AM #4
- Join Date
- Dec 2004
- Bluewater Bay, FL
Re: Property Tax
The assessed value adjusts upon the sale of property, whether it's homesteaded or not.
Quick FAQ on the Save Our Homes Act from Hillsborough County tax office:
"Property granted Homestead shall be assessed at full market value (just value) as of January 1 of the year in which the property receives the exemption. In subsequent years, the assessed value of homestead exempt property will not increase more than 3% or the percentage change in the Consumer Price Index, whichever is less. There are exceptions to that limitation, including new construction or additions which are found to have escaped taxation in the past. Also, the limitation does not apply the year following a change of ownership."
As Joe said, it doesn't necessarily adjust to 100% of the sales price, but the increase in year 1 can be pretty substantial. You also need to check with your county tax office to see if there are are specific times of the year when they accept homestead exemption filings. When we bought our house, it had previously been a rental (ie. not homesteaded) and the deadline for filing in the county that year was like March 1. We closed on the house May 2, so we had to pay the unhomesteaded taxes the first year (about a $200 cost because you are also not taxed on the first $25K of assessed value) and then got covered under Save Our Homes the following January.
Re: Property TaxOriginally Posted by DuneDog
It matters not, what the property was prior to your ownership. Ex- In Jan 2006, you buy a Gulf front property, that had been owned and homesteaded by the same guy for the last 30 years, for $4 Million. That guy's taxes may have been only $200 for 2005 tax year. According to the Property Appraiser, your new "Assessed value" will be based on your purchase price x 85%. ie- your 2006 tax bill should be much, much higher than the previous owner's tax, because of the transfer of the property and the new assessed value. The Save Our Homes Act will not cover this property, until you homestead for a year, at which time the assessed value cannot increase more than 3% per year from the last assessed value.
If your property is not homesteaded, the Property Appraiser looks at recent sales in your area to calculate the new Assessed Value, very similar to an Appraiser looker at Sold comps.
I hope I am not making this too cloudy. If so, Google " Save Our Homes Act" FL and I bet you will find the info in more legal terms.
Re: Property TaxOriginally Posted by beachmouse
Here is info from Waltonpa.com
Save Our Homes Amendment
10 Questions & Answers
Q. What is the new law?
A. Section 193.155(1), Florida Statutes, was enacted to implement an amendment to the state constitution to limit annual increases in property value assessments on real property qualifying for and receiving the homestead exemption.
Q. Which property is affected?
A. Only homestead property that remains under the same ownership during the calendar year qualifies for the limitation.
Q. What types of property are not subject to the cap?
A. Non-homestead property (such as residences without homestead, vacant land, nonresidential property), agricultural property, tangible personal property as well as homestead property that has been sold or otherwise conveyed to a new owner during the calendar year are not subject to the limitation on assessment.
Q. What about improvements or additions to the property?
A. The full market value of physical alterations to the property such as additions or improvements (not including normal maintenance) will be added to the property's assessment after the cap has been applied to the qualifying homestead property.
Q. How is property with a partial homestead exemption affected?
A. Only that portion of the property receiving homestead exemption is subject to the assessment limitation. The remainder of the property is assessed at full market value under the law.
Q. How does the limit (cap) apply?
A. Property receiving the homestead exemption is to be assessed at full market value the year in which the property receives the exemption.
In the following year, the property is reassessed and any change from the prior year's value is not to exceed the lower of 3% of the assessed value for the prior year or the percentage change in the Consumer Price Index. In no instance may any assessment exceed market value.
Q. What is the so-called ''recapture" rule?
A. In September 1995, the Governor and Cabinet approved a rule directing property appraisers to raise the assessed value of a qualifying homestead property by the maximum of 3% or the annual inflation rate, whichever is less, on all properties assessed at less than full market value whether or not that property's value increased during that calendar year.
For example, Property A's market value increases by 10% this year. As a homestead property, the property appraiser can only increase its value by 3% under the limitation.
In the next year, Property A's market value did not change. Since its assessed value under the limitation remains under market value, the property appraiser must increase the assessed value by 3% to bring its value closer to market value.
Q. What happens when a property is sold or otherwise conveyed to a new owner?
A. The assessment on any property which is sold or otherwise conveyed to new owner during a calendar year is raised to full market value according to law. The limitation will be applied to the assessed value in the first year following the year in which the new owner qualifies the property for homestead exemption.
Even if the property received a homestead exemption under the previous owner, the limitation - just like the exemption - expires with a change in ownership. The new owner must apply for and receive a homestead exemption.
02-10-2006, 10:18 AM #7
Re: Property Tax
Now I think I've got it. Thanks
Re: Property Tax
here is a bit more from waltonpa.com
State of Florida
Eligibility Criteria to Qualify for Property Tax Exemption
WHEN TO FILE: Application for all exemptions must be made between January 1 and March 1 of the tax year. However, at the option of the property appraiser, (original homestead exemption applications may be accepted after March 1, but will apply to the succeeding year). Initial application should be made in person at the Property Appraiser's office. Subsequent yearly renewal of exemption status may be made by mail. Failure to make application by March 1 of the tax year shall constitute a waiver of the exemption privilege for that year.
$25,000 HOMESTEAD EXEMPTION: Every person who has legal or equitable title to real property in the State of Florida and who resides thereon and in good faith makes it his or her permanent home is eligible. First time applicants are required to furnish their social security number, and should have available evidence of ownership i.e., deed, contract, etc. If title is held by the husband alone, a wife may file for him, with his consent and vice versa. If filing for the first time, be prepared to answer these and other questions:
1. In whose name or names was the title to the dwelling recorded as of January 1st?
2. What is the street address of the property?
3. Are you a legal resident of the State of Florida? (A Certificate of Domicile or Voter's Registration will be proof if dated prior to January 1st.)
4. Do you have a Florida license plate on your car and a Florida driver's license?
5. Were you living in the dwelling which is being claimed for homestead exemption on January 1st?
ADDITIONAL $25,000 HOMESTEAD EXEMPTION FOR PERSONS 65 AND OLDER: Every person who is eligible for the homestead exemption described above is eligible for an additional homestead exemption up to $25,000 under the following circumstances: (1) the county or municipality adopts an ordinance that allows the additional homestead exemption which applies only to the taxes levied by the unit of government granting the exemption; (2) the taxpayer is 65 years of age or older on January 1 of the year for which the exemption is claimed; (3) the annual household income of the taxpayer (defined as the adjusted gross income as defined in s. 62, United States Internal Revenue Code of all members of a household) for the prior year does not exceed $20,000 (beginning January 1, 2001, this income threshold is adjusted annually by the percentage change in the average cost-of-living index); and, (4) the taxpayer annually submits a sworn statement of household income to the property appraiser not later than March 1.
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