Ask Renee: Property Tax Reassessments

Hello, this is Renee Han with Kane Premier Properties, and this is part of a series that I call Ask Renee, where I tackle some of the more common real estate questions that I get asked on a regular basis. What I wanted to focus on today is to talk about property taxes, and more specifically reassessments. So when I'm out showing property, whether I have a listing and someone's asking the question of me, or I'm working with a buyer, it's not uncommon to be asked about how How much are the property taxes for this particular property? And what people need to understand is what you're going to see in the record, the tax record, is what that homeowner has been paying at that time. Why is that important to stress? There are a number of things that could affect what they're paying on that particular house at that time. One could be, do they have the property homesteaded? And homesteading means they've declared that property as their primary property, and that they live in that home for 6 months and 1 day per year. That gives them a tax benefit in terms of assessable tax value. It may be that they've had their home homesteaded for a long enough period that they have some Save Our Homes credit, which again is another tax benefit. So I always tell people, it's good to look at what the current tax rate is, but you need to understand that as a buyer, when you go to purchase that home, what that homeowner had been paying may not necessarily be fully reflective of what you as a new homeowner would be paying going forward. So a reassessment of property tax refers to a periodic, periodic reevaluation of the property's value for tax purposes. State and local governments will assess property taxes based on two variables: One is the property values, and two is the tax rate for the area that that particular home is in. So local laws may vary, but reassessment generally takes place every 1 to 5 years when a property changes hands. So it's important to know that your taxes can increase once the tax collector reassesses your property after the purchase. Depending on when you close, it may not necessarily be reflected right away. So there could be a delay. So in your first year of owning that property, you may see taxes at a certain rate, but if the assessor hasn't gotten around to their regular schedule of reassessments, you may see a delayed increase. If your seller has lived in the property for a long time and/or had other exemptions, as I mentioned, such as Save Our Homes, assess— assessment limitation, their current tax rate may have been kept at a much lower rate than what the neighboring properties are and what future homeowners of that property might pay. After ownership changes hands, Florida law requires that the property tax exemptions be removed and that the property be reassessed to the just value. In addition, first-time Florida homeowners may not qualify for assessment limitations. So on January 1st of the following the purchase date— so if you purchased on October 1st of 2019, January 1st of 2020 is when that property could potentially be reassessed. For further details that can impact the reassessment effective date, we always recommend that you contact the Florida Department of Revenue or directly call the Collier County or Lee County Property Appraisers Department. A couple of things to think about: number one, we recommend that you check with your county tax website. It may have tax estimations, but even with that, you may not accurately necessarily know what the increase is going to be. Number 2, you could look up similar neighboring properties on the county tax website and look and see what their tax rates are so that you're looking at more than one home. Lastly, you could ask for property tax information from a Florida licensed real estate professional like myself or a mortgage lender. Again, keep in mind these are just things to give you an idea of what the taxes have been and you need to know that that could change both because of the prompting of a purchase. It can also change when permits are pulled on a home for improvements, renovations, additions, those kind of things. So again, just wanted to touch briefly upon reassessment because I do often get asked about what taxes are on a property, and I'm always quick to point out that it may not be reflective of what that new homeowner may experience going forward. Thank you, and if you have any other questions, please don't hesitate to reach out. Again, Renee Han with Caine Premier Properties.