While no one likes paying real estate tax, it is part of homeownership. Beyond just that, real estate taxes cover many of the vital services you expect from owning a home, including infrastructure maintenance and many vital public services such as trash, police, and fire rescue.
While many people know that real estate tax is something they pay, they may not know what exactly it is and all it incorporates. So, whether you are a first-time home buyer trying to navigate the home-buying process, or a homeowner looking to learn more about these taxes you pay, this page is designed to answer the question, “What is a real estate tax?”
What is a Real Estate Tax and Why Do I Have to Pay It?
Real estate tax, also known as property tax, is a levy imposed on the value of real estate property by the local government. The primary purpose of this kind of tax is to generate revenue to help fund essential local services and support community development projects such as police and fire departments, infrastructure maintenance, and other public amenities that contribute to the overall well-being of the community.
As a result, property tax plays an essential role in helping sustain your local government, allowing it to provide you and your neighbors with the essential services that you need daily.
How Is My Real Estate Tax Calculated in Florida?
In Florida, real estate tax is calculated based on several factors, with the most significant being the assessed value of the property. The county property appraiser determines the assessed value and represents the estimated market value of the property. The millage rate, which is set by local taxing authorities, is then applied to the assessed value to calculate the property tax. The millage rate is expressed in “mills,” with one mill equal to one-tenth of a percent.
For example, let’s say the assessed value of your property is $400,000 and the millage rate is 10 mills. The property tax would be $4,000 (400,000 x .01 x 10).
Possible Real Estate Tax Exemptions
Florida law allows for certain exemptions that can reduce the taxable value of your property, ultimately lowering your real estate tax liability. Understanding these factors is crucial for homeowners to effectively manage their finances and plan for property-related expenses.
One of these laws is something called a Homestead Exemption. A Homestead Exemption can give homeowners a reduced assessed value of their primary residence for tax purposes.
To be eligible for a Homestead Exemption, you must meet the following criteria:
- Ownership – The property must be the homeowner’s primary residence as of January 1st of the tax year.
- Legal Residence – The homeowner must be a legal resident of Florida.
- Filing Deadline – The application for the Homestead Exemption must be submitted by March 1st of the tax year.
The Homestead Exemption offers significant benefits, including a $25,000 deduction from the assessed value for all taxing authorities (municipal, county, and school districts).
Additionally, in Florida, there is something called the Save Our Homes Amendment. This amendment limits the annual increase in the assessed value of homesteaded properties to 3% or the change in the National Consumer Price Index (CPI), whichever is less. This helps protect homeowners from substantial increases in their property taxes during periods of rising property values.
Apart from the Homestead Exemption, Florida offers various additional exemptions and benefits to certain groups of homeowners. Some notable exemptions include:
- Senior Citizen Exemption – Available to homeowners aged 65 and older
- Veterans Exemption – Veterans with disabilities, as well as surviving spouses of veterans who died in the line of duty
- Disabled Persons Exemption – Individuals with qualifying disabilities
- Agricultural Exemption – Properties used for agricultural purposes
When and How Do I Pay My Real Estate Tax?
In Florida, real estate taxes are typically due annually, and the payment deadline is often in March. However, it’s essential to check with your local tax collector’s office for specific deadlines, as they can vary by county. Failure to pay property taxes on time can result in penalties and interest, so it’s crucial to stay informed and plan accordingly.
In Florida, there are several payment options available, including:
- Online Payments
- Mail-In Payments
- In-Person Payments
- Automatic Payments
How Does Real Estate Tax Impact My Home Buying Process?
For prospective homebuyers in Florida, factoring in real estate taxes is a crucial aspect of budgeting and financial planning. Since property taxes are based on the assessed value of the home, understanding the potential tax liability is essential when evaluating the affordability of a property.
When assessing the impact of property taxes on a home purchase, it’s important to factor in the following:
- Tax rates
- Homestead Exemption benefits
- Future tax projections
By incorporating real estate taxes into your budgeting process, you can make more informed decisions about the affordability of a property and avoid unexpected financial burdens.
What Can I Do If I Disagree With My Real Estate Tax Assessment?
If you believe that your property has been inaccurately assessed, and subsequently, your real estate tax liability is higher than it should be, you have the right to appeal the assessment.
The appeal process in Florida typically involves the following steps:
- Review Your Assessment
- Gather Supporting Documentation
- File an Appeal
- Attend a Hearing
- Receive a Decision
It’s crucial to be aware of the deadlines for filing appeals, as missing them may limit your ability to contest the assessment for that tax year. Seeking professional advice from a reputable company like Galaxy Title can be beneficial in strengthening your case.
Get the Help You Need with Real Estate Tax at Galaxy Title & Escrow
Navigating the complexities of real estate tax in Florida can be challenging, but you don’t have to go through it alone. At Galaxy Title & Escrow, we understand the importance of accurate information and expert guidance when it comes to real estate transactions and tax matters. Our team is dedicated to assisting homeowners and buyers in making informed decisions and maximizing the benefits available to them.
For more information on real estate tax, or any of our other services, contact us today.
Mitchell has been a licensed attorney since 2014 and has practiced in both the transactional and litigation fields of law. His experience allows him to approach every transaction with a depth of knowledge and practical experience most attorneys do not possess. Mitchell prides himself on providing top notch service to his clients.