How to Calculate Property Taxes in Florida Based on Just Value

Along with the warm weather that gives Florida its “Sunshine State” nickname are beautiful tropical landscapes that, in many places, include a coveted ocean view. Florida property owners may pay a premium for seaside views, but the responsibility of paying property tax falls to everyone, even those who live inland without an ocean in sight. Figuring Florida property tax rates by county is a multipronged calculation that includes millage rates, exemptions and something called “just value.”

Property can be valued by using different metrics, including its worth on the market. This market value of a property is also called its “just value." Fair market value represents what a property will sell for in current market conditions, which may be quite different than its original selling price. And it’s the fair market value that municipalities use as one indicator of a property’s value for tax purposes.

Fair market value isn’t an arbitrary designation; it meets the test of an arm’s length transaction. This means the fair market value of a property must meet certain conditions. For fair market value be determined, a buyer and a seller, both of whom are unrelated, must be informed about the real-estate transaction and on equal footing with their bargaining power without being pressured to buy or sell.

In addition to evaluating a property’s just value for assessing property tax, Florida considers two other valuations of the property – its assessed value and its taxable value. The relationship between these three valuations determines how property taxes are assessed in Florida. Tax appraisers allow some concessions to value, which help lower a property owner’s tax liability and reduce the total tax he owes.

Florida tax appraisers arrive at a property’s assessed value by deducting the Save Our Homes assessment limitations (SOH) from the property’s just value. Beginning with the first year after you receive a homestead exemption when you purchase property in Florida, an appraiser determines the property’s just value. With each subsequent annual assessment, your property taxes are prohibited by law to increase more than the lesser of 3 percent of the previous year’s assessed property value or the percentage of change in the Consumer Price Index.

By capping the increase in property taxes, the SOH assessment limitation ensures that the assessed value cannot exceed the just value of a property. Florida statutes Section 193.155 defines the SOH benefit as "the accumulated difference between the assessed value and the just (market) value.” If your property value decreases, its assessed value may still increase. However, this assessed value won't ever exceed the just value.

Eligible property owners in Florida can transfer, or “port,” some or all of their SOH benefit from one property to another when they move. By doing this, the tax assessment for the new property is lower, which also results in a lower tax burden.

To qualify for the SOH portability transfer, you’ll have to establish your homestead exemption in the new property within two years of Jan. 1 in the year after you moved from the former property (not two years from the sale of the property). You’ll also have to file Form DR-501T Transfer of Homestead Assessment Difference when you file your homestead exemption for the new property. Both forms must be filed by the March 1 deadline. After completing all required applications and forms, you’re allowed to petition the county’s value adjustment board if the property appraiser denies your application.

Florida statutes Section 193.155(3) defines a change in ownership of a property as a “sale, foreclosure or transfer of legal title or beneficial title in equity to any person.” If your property has a change in ownership or you transfer it according to this definition, the property loses its SOH benefit. After the loss of this benefit, the property is assessed at its just value the following Jan. 1.

In addition, a property’s loss or removal of homestead status also triggers its tax reassessment as well as its SOH benefit. If your property’s homestead status changes, contact your county appraiser to avoid any penalties.

Some exceptions that will not result in a reassessment are:

• Changes or transfers between spouses
• Some transfers upon the death of the property owner
• Eligible transactions both before and after transfers that allow the same persons an entitlement to the homestead exemption

After the assessor deducts the SOH assessment from a property’s just value to arrive at its assessed value, the tax collector calculates a property’s taxable value after also deducting any eligible homestead exemption. This taxable value is the value on which taxes are determined for each property owner.

If the property you own is the permanent residence of you or your dependent, you may be eligible to claim a homestead tax exemption up to $50,000. Divided in two parts, the first half of the homestead exemption ($25,000) is for all property taxes (including school district taxes), and the second half (up to $25,000) is dependent on the property's assessed value that's between $50,000 and $75,000 (not including school district taxes).

By filing Form DR-501 Original Application for Homestead and Related Tax Exemptions in the county where the property is located, you can apply for the Homestead Exemption. You'll need to provide proof of ownership, and you may also need to provide other forms of identification, including your Florida driver's license, Florida vehicle license plate number, voter registration number and proof of utilities payments at the homestead address.

If your property's assessed value is $45,000, you're eligible for a $25,000 tax exemption. The remaining $20,000 of your property's value is taxable, because it's less than the $50,000 minimum to be eligible for the additional homestead exemption.

If your property's assessed value is $65,000, you're eligible for a $25,000 tax exemption. The next $25,000 of assessed value is taxable, but the remaining $15,000 is eligible for exemption from nonschool taxes.

If your property's assessed value is $85,000, you're eligible for a $25,000 tax exemption. The second $25,000 of assessed value is taxable, but the third $25,000 of assessed value is exempt from nonschool taxes. The remaining $10,000 balance of assessed value is taxable.

The Florida property tax calculator is based on property appraisals, considering just value and assessed value. Appraisers determine Florida property tax rates by county, and each county property appraiser assesses all real property by Jan. 1.

After determining each property’s taxable value, the county appraiser sends a Notice of Proposed Property Taxes to property owners in August. When the local government determines its annual budget, county tax collectors send each property owner a final tax bill in late October or November, and the property owners must pay their taxes by March 31 of the following year.