Archive for February 20th, 2012

How Do I Estimate My Property Taxes?

Monday, February 20th, 2012

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com). Join us on Facebook.

Understand your taxes before you have to pay them.

Understand your taxes before you have to pay them.

One of the first questions we get when a buyer steps into the market is, “What are the taxes on this home?”

And while we can’t always give the exact number, we can always at least give a solid estimate.  Here’s how you can estimate your property taxes.

First off, St. Johns County (where we are located) has a great property online tax estimator at the property appraisers website.  Go there right now if you want, or if you want a more detailed explanation of the process, just keep reading.

The first thing you have to understand about Florida real estate is that the property taxes are based on the purchase price.  So even though a home or other property that you are looking to buy is currently taxed at “$X,” that dollar figure will bear no relation to what you will pay in property taxes.

Appraised value for tax purposes.

Let’s do an example.

You buy a home here in St. Augustine for $200,000, that is where the tax appraised value starts before anything is deducted.

From that figure the county will knox off 8% (I believe it is still 8% for St. Johns County…and by the way each county knocks off a different amount) as a way of giving you a break for any closing costs you paid.

So the property you purchased for $200,000, minus 8%, is now appraised for tax purposes at $184,000.

If you are not a resident of Florida, or if you are a resident of Florida but this is not your homesteaded property, or this is commercial property or land, that is pretty much where your property will be appraised at, and there will be no further deductions on the appraised value.

If that’s the case then you can just skip down to the section on millage.

If you are resident of Florida and this will be your homesteaded property, read on.

Homesteaded property, and other deductions.

If the home you are buying will be listed as your homestead (you enroll your home as your “homestead” with the property appraiser each year between January and March), then you get to deduct another $50,000 off the appraised value.

In our example above that would take the appraised value down from $184,000 to $134,000.

What is homestead?  Well, basically, it’s a way of telling the state that this is your primary home.  When you do that it will protect your home from creditors if you ever declare bankruptcy, or otherwise fall on hard times.  What it won’t do is protect you from foreclosure if you fail to make the house payment, or protect you from a tax sale if you fail to pay your property taxes.

Homesteading will also cap the maximum amount they can raise the appraised value of your home in a given year to 3%.

For example, during the real estate boom some properties in St. Augustine were appreciating at 25% a year and compounding.  If the local property appraisers would have been allowed to raise valuations 25%, a lot of people would have been taxed out of their home.  In other words, they could still afford the house payment, but not taxes that were going up 25% a year.

That’s why homesteading was created, because Florida is a place where home values can suddenly rocket up.  The constitutional amendment that created homesteading is actually called “Save Our Homes.”

There are some other small ($500) deductions as well: for disabled persons, widows and widowers, and the blind.  Also, if you were disabled as a Veteran you can take an additonal $5000 off the appraised value.

Millage

The general millage rate in the non-city limit areas of St. Johns County is 15.8.  The City of St. Augustine and Hastings are closer to 22.  St. Augustine Beach is 18.  One section of Summer Haven is 25.  There are probably 40+ different millage zones.

If a millage is 15.8, then you essentially multiply the home value by .0158 to get a base rate for your taxes.  For the example above that would work out to about $2117 a year.

What millage zone is a particular property in?

Well, the way I find out as a Realtor is by going to the tax collectors website and pull the record on the property in question.  That will not only give you the zone but the total millage breakdown as well.  It will also alert you if there is a Community Development District (CDD) on your taxes.

Community Development Districts (CDDs)

A CDD is a special, additional, taxing district within the county.

CDDs exist basically to pay off the bonds issued to put in infrastructure when a big housing development went in.  In other words, for the developer to put in all the roads, drainage, amentity centers, etc., in a development like Palencia or Heritage Landing, they had to issue bonds.  Now each owner in those communities pays those bonds off over a period of years as a group, via a CDD assesment on their taxes.  The CDDs typically last around 20 years before they are paid off.  Since most CDDs came into existence no earlier than 2003, many won’t be paid off until 2023 at the earliest.

A CDD will typically add several thousand dollars to your tax bill.

Now, before you balk at that consider this.  In communities where there is a CDD the association fees are typically pretty low.  When you break down the payment from a monthly standpoint, and then add in your monthly association fee,  it’s usually inline with what other communities are paying on a monthly basis.

CDDs actually have their own small boards, and the CDD assesment can actually go up or down a bit in a given year.

Garbage and Recycling.

In some areas garbage and recycling are part of your tax bill.  It’s typically only a few hundred dollars.

Here’s the funny thing.  When you pay the tax bill in November, your are paying for the year you are in.  But you are paying the garbage portion of the bill for the upcoming year.

Portability

Last but not least there is something called “portability.”

Portability works this way: if you own a homesteaded property in Florida and you sell it, you can “port” a portion of those tax savings to your new homestead.

The portability formula is a bit complex and I’m not going to cover it here (hmmm…sounds like a future blog post), but at least know that it exists.

Contact St. Augustine Team at requestion@StAugTeam.com for the least “taxing” experience in real estate, or just contact Broker Sean Hess at (904) 386-8327.