Tax time is here – property tax rate setting time, that is
Ah, July. Vacations… summertime… and taxes.
Yes, it is property tax season when local governments propose their tax rates for what property owners will pay this year.
Here's a primer for property owners as locally elected officials set their maximum property tax rates before voting on the final number in the weeks ahead.
What can homeowners expect?
Most homeowners can expect to pay more in property taxes when the bills arrive later this fall. But that’s not necessarily because tax rates are going up.
How can that be?
The hot housing market. As property values go up, so do taxes — even if the tax rate remains the same. Unless a tax rate is going down by quite a bit, tax bills can still increase. It is one of the costs of rising property values: higher taxes even if the tax rate stays the same.
Miami-Dade and Palm Beach counties have proposed to cut their property tax rate. Will that mean lower bills?
Probably in Palm Beach County because commissioners want to cut the county’s property tax rate by about 5%. It is the largest cut since the Great Recession 15 years ago. And it should be big enough to lead to a small drop in Palm Beach County property tax bills.
READ MORE: Budget season is here. Home values are up
Miami-Dade County is considering a much more modest property tax cut of 1%. That probably means most homeowners will still see higher tax bills, but not as high as they would have been without the rate cut.
How does the math work?
In Florida, the assessed value of your home — which is what your property taxes are based on — cannot increase by more than 3%. So a rate cut of more than 3% could lead to a lower tax bill.
This 3% ceiling is for homesteaded properties — meaning a property you live in full-time.
If you own other properties like a vacation home or investment property, their assessed value can go up by as much as 10%, so the effect of these tax rates can be much different.
Put some real numbers behind this.
Let’s take Palm Beach County. It wants to charge homeowners no more than $4.50 for every $1,000 of your home’s assessed value.
Let’s use a single family home worth $500,000 – which is a less than the median price of a home sold in South Florida in June.
That $500,000 home would face a county tax bill of about $2,200. That’s a savings of $100 compared to last year.
In Miami-Dade County, that $500,000 house would be taxed about $2,300. About $20 less than last year.
What about Broward County?
Broward has not yet released a proposed maximum property tax rate. That will happen by early September at the latest. This year, a Broward owner of a $500,000 dollar home paid $2,800 in county taxes.
And in the Keys?
Monroe County brags that it has the lowest property tax rate in the state. And it is going up. The county is considering raising its property tax rate by 8%. That’s about $100 more for a home worth half a million dollars.
Ok. Are these the only tax rates homeowners should pay attention to?
Nope. County government is only one of several that levy property taxes. School districts. Fire districts. Library districts. Hospital districts. South Florida Water Management District. The specific town you live in. All levy their own property tax. It all gets added together to make up a homeowner's property tax bills later this year.
What do these taxes pay for?
Local government services such as police, fire, schools, teachers, parks, roads, public transportation, jails, animal services, libraries, public housing, and others too.
By the way, the school district tax rate is often higher than the county tax rate.
Are these tax rates set?
Not yet. This is the time of year most governments set their ceiling for their tax rate. TRIM notices will start arriving in homeowner’s mailboxes in about six weeks. These are notices of proposed property taxes — not a final bill, but an indication of the assessed property value, any exemptions and the proposed taxes based upon the proposed tax rates.
Elected officials will finalize those tax rates after more public hearings in the weeks ahead.