You’ve found the dream house, the price is right and you are ready to purchase. Make sure you stop and consider additional expenses first. The cost of homeownership goes beyond just your mortgage payment. For instance, property taxes and flood insurance. In this article we are going to focus on property taxes. Did you know that Florida’s property taxes average 1.1% of a home’s assessed value? This tax helps support state and local government funding, since Florida doesn’t impose a personal income tax.
It’s imperative that you discover how your property tax bill works. Once you understand how your property tax bill is calculated, you can make informed choices and challenge it, if you feel it’s too high. In addition, property taxes can be a great write off that you, the home buyer, would be remiss to not take advantage of. There are a multitude of tax breaks for homeowners and you should take the time to educate yourself of these.
What’s included in your home property taxes? You will have your annual assessment and direct assessments, which are flat fees for specific services like landscaping and street cleaning. Some areas also have special assessments to pay for specific projects such as a new library or parking lot. The key here is to RESEARCH both direct and special assessment taxes before you buy!
How does the calculation work? A tax assessor attaches a property value to your home and makes adjustments based on local rules to determine the assessed value. For instance, your county may determine property taxes based on 20% of your homes assessed value. To determine the assessed value the county assessor would multiply the fair market value of your home by 20%. Then that value is divided by 1,000 and then multiplies that number by the mill rate. (The mill rate is the number that represents the amount per $1,000 of the assessed value of the property. For ex, if the mill rate is 7 and your home has a taxable value of $150,000 , your tax bill would be $1,050) It sounds complicated, but a good agent can help you find this information out BEFORE you put in a contract.
Don’t despair if this all sounds like too much! There is a bright spot in the tax conversation and that is tax relief. Our sunshine state offers many tax breaks for home owners that could offset your tax costs. Most people are eligible for a homestead exemption and there are various other tax breaks depending on veteran status, age and disability. (You can link to this great article to read more on this. Tax Relief)
The moral of the story here? Know before you buy. There are often costs that you wouldn’t think of when considering home purchase. You don’t want to be blind-sided by these factors. Educate yourself, find a dependable real estate professional to help you and go out there and become a home owner!