Florida property taxes - need help understanding, please!

[Orchidflower]

I think it was last year that Florida changed their tax laws by vote. From what I have read, older residents that owned property before the laws went into effect will be paying lower property tax rates, whereas, newer residents and buyers today will be paying a much higher rate. That's about all I know actually.
Since I am totally lacking knowledge about what these new property tax laws for Florida mean, is there someone on this board that has checked into it and can explain what that would mean to me if I move there and buy a 2 bedroom condo tomorrow?

Also, is it these new property tax laws that have folks leaving Florida faster than ever? I am wondering how much these laws play into the exodus?

 

[audreyh1]

Is there a big Florida exodus? Where are they going? (Not here hopefully)

Audrey

 

[Moemg]

There were not big changes in Florida's property taxes even though the Gov.promised there would be . Florida's tax situation is crazy .Depending on when you bought your house and what you paid that is what your taxes are based on . So if you live in a neighborhood of similar houses everybody is paying different amounts . They did lower the taxes slightly due to the lower values but that's about it . I haven't noticed any mass exodus except the snowbirds returning home as usual .

 

[jimnjana]

People did leave, but it had to do with job losses, not property tax. Not sure I understand what the original question is, because in all of the states I've owned homes in, homes that did not change hands frequently, residents payed lower taxes, to a point, than the new guy on the street.

 

[73ss454]

I lived in NY and taxes were not based on when you got there. Taxes were mostly fair although high. 4 Years ago I moved to Florida and the tax structure, if there is one, is impossible to figure out.

There is no hope trying to figure out what you're going to pay. You're going to pay what ever the government thinks you should pay and there's no way to figure it out or change it, I've tried.

People on the same block with the same houses are paying all different taxes. Sounds crazy but I've given up trying to figure it out. If you plan on calling the property appraiser you might as well call Disney World and ask for Donald Duck.

 

[Orchidflower]

Now you pay insurance on replacement cost of condo?

Here is one thing I have read: If you go to Florida and purchase your condo outright, then you own the HOA fees, of course--BUT you now have to pay insurance on the total amount of the cost of your condo in case of damage (I assume they mean hurricane). I assume this is replacement cost of your condo? I wonder what your insurance covered before then?
Anyone know anything about this law??

I'm starting to realize Florida home insurance laws and rules are confusing.

 

[jimnjana]

Here is one thing I have read: If you go to Florida and purchase your condo outright, then you own the HOA fees, of course--BUT you now have to pay insurance on the total amount of the cost of your condo in case of damage (I assume they mean hurricane). I assume this is replacement cost of your condo? I wonder what your insurance covered before then?
Anyone know anything about this law??

I'm starting to realize Florida home insurance laws and rules are confusing.

I think it depends on the HOA. In our development there are single family homes, townhomes and duplexes. The townhomes and duplexes pay for their insurance on the structure through the HOA dues.

 

[73ss454]

Home owners ins is another problem. I paid in full last month for the year which starts on April 25th. Then I received an email from my broker that the ins company went Bankrupt this week. Now I have to find another ins company and hope I get my $ back from the Bankrupt company. Sheeeesh!

 

[chinaco]

Not totally sure of the facts.

But I spoke with a Florida resident about owning property there... they said for new residents the property taxes were very high. Plus, property insurance costs are very high due to the risk of hurricane and floods (from hurricanes).

Not sure of your reason/purpose... but IMO if it is to snowbird... I think renting may be a better approach.

 

[Orchidflower]

Home owners ins is another problem. I paid in full last month for the year which starts on April 25th. Then I received an email from my broker that the ins company went Bankrupt this week. Now I have to find another ins company and hope I get my $ back from the Bankrupt company. Sheeeesh!

And this is the sort of thing that scares me about Florida. I'm terribly sorry you have to go thru this...what a drag.

 

[Disappointed]

This is the same as California, your property taxes are based on your purchase price. They usually add other local taxes on to the bill. On the average it is 1% + whatever they want to tag on to it. It does gradually increase every year by CPI but not to exceed 2% per year. They call it "Prop 13".

http://en.wikipedia.org/wiki/California_Proposition_13_(1978)

A person who bought his/her house 40 years ago for $30,000 is paying t very little, but if the house is sold for $300,000, the new owner will be paying about 10 times that amount. It is crazy, but that is the way it is.
The history of prop 13 is quite interesting. I wonder if there is a better system.

mP

 

[Dancer373]

I've lived in Florida since 1972 and on my current property since 1985. I would suggest you contact an real estate person or possibly an insurance person to help you with this. I believe the taxes change from county to county. I'm in either the poorest or second poorest county. I have 3 1/2 acres and a Palm Harbor Home (2004 ) 1800 sq feet and pay about $ 600 in property taxes per year.

 

[MichaelB]

Hey Babe. (sorry, I’ve always wanted to say that) Florida property tax works like this

Your property is assessed. You get a $50K homestead exemption if you are a florida resident. A millage rate is then applied to the adjusted assessment value – the tax you pay. Additional exemptions apply (like senior) but are specific to the counties.

The yearly assessment value cannot increase by more than the CPI and is capped at 3%.

There is no limit to an increase in the millage rate.

So a $200K home, minus $50K exemption, with a 2% millage rate, would pay $3K in tax. The $200K assessment value cannot increase by more than $6K.

There are no exemptions for out of state residents, landlords, or businesses and the 3% limit cap does not apply.

That is florida property tax in a nutshell.

In a hot property market this creates large distortions, as current owners are limited in their increases while new buyers pay taxes on the assessment value = purchase price rate. Given the decline in property prices here, however, these distortions are going away quickly.

Finally, the most recent change ('08) was “portability” - to allow people with large differences between market value and assessed value sell their property, buy another, and apply some of that delta to the new property.

 

[ziggy29]

In a hot property market this creates large distortions, as current owners are limited in their increases while new buyers pay taxes on the assessment value = purchase price rate. Given the decline in property prices here, however, these distortions are going away quickly.

Tell me about it. Thanks to Prop 13 in California, the first property I bought in 1989 -- a 1 bedroom, 740 square foot condo -- had a property tax levy that was *double* what my parents paid on a 4/2 single family house not too many miles away, which they bought in 1966. That was real fair. Not.

 

[Orchidflower]

Hey Babe. (sorry, I’ve always wanted to say that) Florida property tax works like this

Your property is assessed. You get a $50K homestead exemption if you are a florida resident. A millage rate is then applied to the adjusted assessment value – the tax you pay. Additional exemptions apply (like senior) but are specific to the counties.

The yearly assessment value cannot increase by more than the CPI and is capped at 3%.

There is no limit to an increase in the millage rate.

So a $200K home, minus $50K exemption, with a 2% millage rate, would pay $3K in tax. The $200K assessment value cannot increase by more than $6K.

There are no exemptions for out of state residents, landlords, or businesses and the 3% limit cap does not apply.

That is florida property tax in a nutshell.

In a hot property market this creates large distortions, as current owners are limited in their increases while new buyers pay taxes on the assessment value = purchase price rate. Given the decline in property prices here, however, these distortions are going away quickly.

Finally, the most recent change ('08) was “portability” - to allow people with large differences between market value and assessed value sell their property, buy another, and apply some of that delta to the new property.

Man, I just love giving it to me in the bottom line form. Thanks, MichaelB!!! I get it totally now.

 

[Orchidflower]

I've lived in Florida since 1972 and on my current property since 1985. I would suggest you contact an real estate person or possibly an insurance person to help you with this. I believe the taxes change from county to county. I'm in either the poorest or second poorest county. I have 3 1/2 acres and a Palm Harbor Home (2004 ) 1800 sq feet and pay about $ 600 in property taxes per year.

I looked up your About Me and see you are N. Florida--whichever city that is. I see why your taxes are lower...smart move really.

 

[MichaelB]

Tell me about it. Thanks to Prop 13 in California, the first property I bought in 1989 -- a 1 bedroom, 740 square foot condo -- had a property tax levy that was *double* what my parents paid on a 4/2 single family house not too many miles away, which they bought in 1966. That was real fair. Not.

People confuse not fair with hard to understand. Both are easy to understand - and quite unfair. I thought it couldn't get any worse - but the portability act of '08 showed me, once again, just how wrong I could be.

Man, I just love giving it to me in the bottom line form. Thanks, MichaelB!!! I get it totally now.

My pleasure

 

[Orchidflower]

KISS or Keep It Simple, Stupid is my favorite term.

 

[73ss454]

MB, is mostly right. The homestead exemption is 25K on all property taxes and the other 25K is on some of the taxes, not the school taxes. It just sounded good when Crist was running for office.

MB is also right that it is mostly just misunderstood. It's hard to understand the Florida taxes as the people in the Property offices don't understand them so you can't get a correct explanation. Also, I don't see it getting better, yes, the taxes came down a bit this year but everyone is still paying different taxes, at least on my block. I made such a stink at the property appraisers office they actually sent an appraiser to my house the next day. He walked around a few of the homes and said I was right about my complaints although he couldn't give me a clear explanation of my taxes. He did grant me a 5K reduction in the valuation of my home but I think it was just to shut me up.

I still contend that they just make up #'s and hope for the best and see if you'll pay it with out complaining.

 

[Kroeran]

things to consider:
- for the area you are considering, pay attention to incorporated vs unincorporated areas and county lines. There may be a difference in the total applicable taxes when you cross lines. Will your taxes be covering the social expenses of a poor area or supporting a well organized city union?
- if on well and septic, ask if town/county is about to put in city water and sewage, and what the assessment will be
- pay attention to evacuation zone level and FEMA high risk zones, which will effect how often you have to evacuate and insurance cost (also, high risk zones beside inland sloughs and lakes).
- pay attention to Community Development District (CDD) liens which are in effect hidden mortgages on the property paid off over many years.
- pay attention to hidden liabilities and vulnerabilities of associated golf courses or importance of vapour facilities not yet constructed
- real estate and developers agents will not tell you the bad news regarding problems and all expenses
- attend an HOA meeting before buying
- rent and become a savy insider rather than buying as a sucker yankee
- hang out in City Data Florida forum
- it really is paradise down there, especially if you can get away for a few months of the summer or just don't mind the summer heat or can otherwise cope.

this is where we ended up

 

[Orchidflower]

That's great information, Kroeran! Thanks!!! Any of us considering Florida can use your list here of things to watch out for.

 

[kcowan]

Very useful thread. Thanks all.

 

[Orchidflower]

Here's what's scaring me at this point about moving to Florida: I chose an area and want a condo, because it's just me and I plan to travel alot so why get a house; however, I hear not to get a condo because--should there be a hurricane or storm again that causes flooding--you could be stuck with a huge bill by the HOA for what wasn't covered by the building insurance, I guess. And I also get messages that so many condos have gone bust down there that--being unable to get filled up with enough folks--they ended up just being torn down. Or people might move out of the condo section and you will end alone there with all the bills and so forth.
Good grief...it seems everywhere I turn regarding living in Florida I get a barrage of negatives as to be careful, be cautious, don't do it--and these are from the Florida NATIVES who have lived thru the hurricanes AND the recession hitting their State. It's making it very difficult for me not to get cold feet, in fact, my toes are getting frosty as I type. I'm at a point that I....just...don't...know...what...to...do...at this point other than pick another State.

 

[MichaelB]

Hi Orchidflower

Take a deep breath. Now relax. There’s nothing wrong with your plan and no excessive risk about buying a condo in Florida. The fact that there are problems in some areas mean that some of the better quality properties are also well priced.

There are lots of nice areas with condos in Fl that are fully occupied and well managed and no riskier than a condo in any other part of the country. You just need to shop smartly – which you are doubtlessly able to do.

If you have the opportunity to rent for a year it would let you get to know an area much better, search locally for property and also make it much easier to carry out due diligence once you start choosing specific properties.

Kroeran has some good pointers. The information you need to choose or eliminate specific properties is readily available. HOA minutes and financial reports, combined with your own inspections, tell you most of what you need to know. Specific questions to HOA boards – like how many owners in arrears, how many units in foreclosure – help as well. Avoiding communities that were substantially developed in the past 6 years and also avoiding buildings that were built after 2005 will greatly reduce your risk.

You may find fine options in other states like (cough) TX or the Carolinas but there is no reason to avoid Fl. All purchases are risky. You give your self the greatest advantage by taking your time, doing due diligence and if possible, living locally for a year.

 

[Orchidflower]

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Hi Orchidflower

Take a deep breath. Now relax. There’s nothing wrong with your plan and no excessive risk about buying a condo in Florida. The fact that there are problems in some areas mean that some of the better quality properties are also well priced.

There are lots of nice areas with condos in Fl that are fully occupied and well managed and no riskier than a condo in any other part of the country. You just need to shop smartly – which you are doubtlessly able to do.

If you have the opportunity to rent for a year it would let you get to know an area much better, search locally for property and also make it much easier to carry out due diligence once you start choosing specific properties.

Kroeran has some good pointers. The information you need to choose or eliminate specific properties is readily available. HOA minutes and financial reports, combined with your own inspections, tell you most of what you need to know. Specific questions to HOA boards – like how many owners in arrears, how many units in foreclosure – help as well. Avoiding communities that were substantially developed in the past 6 years and also avoiding buildings that were built after 2005 will greatly reduce your risk.

You may find fine options in other states like (cough) TX or the Carolinas but there is no reason to avoid Fl. All purchases are risky. You give your self the greatest advantage by taking your time, doing due diligence and if possible, living locally for a year.

2004 and before seems ok then? I have been looking at condos just a little older cause they are so much cheaper (like 1998+/-) and already established.

I agree that the wise thing to do is rent for a year, but, as a single woman, the idea of packing up a second time does not thrill me at all. When I moved up north 6 years ago, due to circumstances, I had to move 3 times in a year and a half...ugh...may I repeat that? Ugh!