Property Taxes Will Hold Surprises
We all know that property values have gone up in the last 12 months, but have you thought of the ramifications in your property taxes? Even if you did not buy or sell this year, there will be changes.
This week's blog is focused on the fact that housing has gone up 15% in one year. Yes, it is significantly changing over the last few months, but if you bought a house in the last 12 months, your property taxes this year may surprise you.
If you are homesteaded, the property tax rise is restricted to 3% per year, if you are not and this is an investment or seasonal property, it could go up 10%.
Below is a great article by Roger Williams who published it for the Florida REALTOR association. Click the title to read the full article, it was very indepth about how taxes are calculated.
FORT MYERS, Fla. – This year turns out to be extraordinary for tax collectors in the Sunshine State because county governments are going to see record jumps in the booty – or bounty, if you will – they’re able to collect after the hot–market months of 2021.
“We are looking at sales occurring in 2021 to set 2022 value,” explains Dorothy Jacks, Palm Beach County’s property appraiser, who points to jumps of 15% in taxable values in the county. That’s a sizeable windfall for county commissioners who determine how much money they’ll need or want in a new budget, and then set millage rates, taxing property owners, to reach it.
“So even though it’s August now,” Ms. Jacks said as that month came to an end, “TRIM notices are based on numbers that occurred in 2021. We have the first half of 2022 to prepare these values, and in August they disclose them to all homeowners.”
It’s not just Palm Beach County, either.
One of the biggest jumps in property values happened in Collier County, where the Just value – that’s the value of a property before any assessments are figured or extra fees are paid if it’s bought and sold – jumped almost 42%, from $131 billion or so in 2021 to $185.6 billion now.
Property Appraiser Abe Skinner, born and raised one county to the north, has served at the Collier County office for 60 years, with a four–year break to run his own business when Haydon Burns and Claude Roy Kirk Jr. were governors in the 1960s, and he was still young.
Mr. Skinner may know everything there is to know about appraising property on the southern Gulf Coast, and until now he may well have thought he’d seen it all.
But maybe not.
“This year was very different – everybody and his brother wants to come to Florida, and they’re paying the price,” he said. “In certain neighborhoods here where you wouldn’t think properties might sell for more than $200,000 or $300,000, they might have sold for $700,000 or $800,000. It shows what’s going on in Collier. The first three quarters of the past year we were appraising many properties that were gradually climbing. And in the fourth quarter it just went crazy.”
After all exemptions have been applied, so far, the taxable value of property in Collier is coming in at about $122.3 billion.
In Lee and Charlotte Counties, too, the word “windfall” for local governments doesn’t seem out of place.
Property countywide is up between 15% and 20% in taxable value, and much more than that in the Just value – in the mid– to upper 30 percentage points – for the first time in more than 15 years, said Paul Polk, Charlotte County’s property appraiser.
“Our Just value, the market value before any exemptions or caps are applied, puts us at $41 billion – that’s an increase of 37%. It was $29.6 billion in 2021,” he noted.
Mr. Polk describes an annual process that takes place in every county.
“In July, the budget director meets before the board, which decides whether they’re going to raise the budget or keep it the same. That means they can lower the millage rate, keep it the same, or raise it.”
With the big jump in taxable value, commissioners could actually reduce tax rates on individual properties and hit the same budget numbers as last year.
“So we had a 17% increase or $3.5 billion in taxable value they were not looking at last year,” Mr. Polk said. “In the initial hearing, they said they would keep the millage rate the same. So they’re going to get more money. They have that option.”
But those figures are not yet set in stone, in any county. Public hearings to determine finally what millage rates to establish, mentioned in TRIM notices, are taking place this week.
Meanwhile, says Ms. Jacks, “each taxing authority sets its own millage rate – and there are 12 or 15 taxing authorities, each with taxing power. They’re looking at, ‘We need X–dollars to run this city or county, or this organization (school boards, mosquito control districts and the like), and they set a rate based on how much value they have to work with.”
How it’s computed
Grim, TRIM and not so slim is how many people these days may view the mail arriving from their county governments in the season we can never seem to escape: Property tax season.
Even hurricanes aren’t annual seasonal occurrences in Florida, which brings to mind an observation first made by Benjamin Franklin in a letter to a French scientist: “The only two certainties in life are Death and Taxes,” he wrote in 1789.
If you’re still breathing this year and you own residential, commercial or agricultural property in any of Florida’s 67 counties, the bill is coming due. August TRIM notices have arrived for property owners: TRIM, an acronym for Truth in Millage.
The millage rate is how much money per thousand dollars of property value elected leaders are going to tax property owners. But those with exemptions – residential homestead exemptions of $25,000 and a few others – won’t pay on the full value of their properties.
What any property owner should know: The tax bill you receive now is for last year’s assessments. Expect to pay more if your property jumped in Assessed value in 2021, as many properties did in a market not just hot, but boiling, for the late months of last year.
And expect to pay a lot more than those with multiyear homestead exemptions if you bought a different home or built a new home anytime after Jan. 1, 2021.
On the other hand, if you remained in a home with a homestead exemption from a previous year (a thing created for all Floridians by former Lee County Property Appraiser Ken Wilkinson), you’re in luck.
Homestead exemptions also restrict jumps in property tax to no more than 3% a year. Other property owners, those without homestead exemptions, are capped at a 10% per year increase.
So here’s a hypothetical: If you bought a home and property for $300,000 in 2011 that you still own, receiving the homestead exemption on it that year and paying $750 in property tax in 2012, your taxes could increase at no more than 3% each year.
The most you could pay this year, therefore – even if your home increased in value from $300,000 to $1 million or more – would be just over $1,000.
But if you sold your home for $1 million in 2021, the new owner could establish a homestead exemption, but he or she would be paying a tax on the new Assessed value.
The various values
It’s not too complicated, but it is both detailed and structured. First, the market value of your home, vacant lot or other property – what you might actually sell it for – is never a direct part of property taxing.
But the so–called market value determined in part by the sales prices of similar or nearby properties, also helps determine what Just value, Assessed value and Taxable values property appraisers will put on your property, explains Matt Caldwell, Lee County’s property appraiser.
“Just value is like the market value you see on a private house, but there’s a difference: the Just value has to reflect pure cash. The commissions you pay for the sale have to be deducted, so your Just value should be lower than your market value.”
But your property tax isn’t based on that.
“From the Just value you step down to Assessed value,” Mr. Caldwell explained, “And that includes your caps: the 3% for the homestead or 10% for other.” There are a host of additional exemptions, too – for widows, for example.
And after assessing all of that, property appraisers determine the taxable value actually reflected in your slim, grim, TRIM notice.