Q&A of the Day – Florida’s Record High Property Prices = Record Tax Assessments
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Today’s entry: Good Morning Brian, As you well know property tax statements have recently been delivered. The increase in appraised property value for us was at least in the 25% range. We called the county appraiser’s office and were told that properties like ours have resold for these or higher prices and thus our appraised value was raised. We plan to file a petition regarding this but when talking to the appraiser familiar with our area he just kept reiterating that people are flipping properties and thus the new value is justified.
We are confused as we thought that the valuation for a single family home homesteaded property could not go up by more than 3% per year. Yet our value went up by $200,000 in one year! We are retired and were shocked to have this jump in our proposed property taxes. If this can happen this year what can happen in subsequent years? Are we mistaken in our understanding of the 3% increase? Shouldn’t our assessed value be based on our purchase price?
Thank you for your help. Obviously, we love listening to your show. You have often commented on what is going on with property taxes in our area, but this just seems like gouging. We did not buy our property to flip it but to live in it.
Bottom Line: Reading property tax statements can no doubt be confusing. But it’s always a good thing to do. Not only because you have a right to challenge your property tax assessment, but as I’m inclined to point out, you should also be aware of all of the taxing districts you’re paying with your property taxes, and how much you’re paying to each of them. I’m convinced that if all homeowners did this, they’d never approve another property tax increase for themselves through local referendums. I was concerned that many Floridians would be caught off guard, the way that you have been by your initial proposed property tax statement, and in May said this in an effort to raise awareness of what was to come.
What’s rising faster than inflation? South Florida’s property prices, which will lead to record high property taxes this fall. It shouldn’t come as any surprise to see double-digit increases in property assessed value in South Florida stemming from what happened last year, but for non-homesteaded property owners you’ll need to be ready for a double-digit increase in your property taxes this year. The first phase-reporting of 2021’s property tax assessments are in for Broward and Palm Beach County and the survey says...maximum property tax increases are coming. The average estimated property value increase – about 10% in Broward and nearly 14% in Palm Beach County.
Now, here’s the good news for you in addressing your specific question...
What this means for South Florida’s homeowners, you can expect paying 3% more if you’re homesteaded and if you’re not – meaning second homeowners and businesses owners can expect to pay 10% more come November – the highest allowable annual increase under state law. There are exceptions, but they are exceptions, only six of the 76 different taxing authorities in Palm Beach County saw increases below 10% - with none lower than 5%. Now of course local taxing authorities could, and generally should, reduce mileage rates to help offset the increases in property taxes – few ever do. So, it’ll likely be record revenue for local governments and record property taxes for you.
So yes, you’re correct, if you’re homesteaded the maximum increase in your property tax bill will be 3% on your homesteaded property. Florida’s homestead law states that the limit in annual increases in assessed value of property with Homestead Exemption is three percent or the change in the Consumer Price Index, whichever is lower. Because inflation had been lower than three percent until last year, we’ve previously had increases which were below 3% each year since 2012. And as mentioned the cap for non-homesteaded property is 10%. But the last time we were talking about average increases for non-homestead property rising as much as ten percent would have been during the early 2000’s housing boom.
Now, where the large appraisal in appraised value can lead to far larger increases in property taxes is during a change in ownership. Once a property is sold, property taxes reset to reflect the current assessed value of the property as opposed to whatever the previous owner was paying. As an aside, that’s why it’s especially important for would-be homeowners to evaluate potential property tax liability based on assessed value as opposed to what the current owner is paying. This has caught many new property owners by surprise as property tax liability has been known to double or even triple once a property is sold. Each property appraiser’s website in Florida includes a property tax estimator tool for prospective property owners to use in advance of purchasing property to attempt to thwart these surprises.
So yes, we’re all paying record high property taxes in South Florida this year, but no your actual property tax increase won’t be higher than 3% this year or any year as long as you continue to own it as your homesteaded property.