When you buy a property, for the first year of ownership, you will “inherit” the prior owner’s tax rate. This is because taxes are paid in November (in arrears) for the 12 month period from January – December of that same year. Each January, the Miami Dade County Property Tax Appraiser’s Office determines the assessed value for tax purposes for every property in the county. If you purchase a home mid-year, your new base year for tax purposes will begin January of the following year. TRIM notices (aka estimated real estate tax bills) come out in August and real estate taxes can be paid early starting in November
How can I calculate my taxes?
Miami Dade County has a great tax estimator tool on their website miamidade.gov. Enter the market value as 85% of the contract purchase price for the purposes of this estimator tool. If you prefer to do it by hand, take 85% of the contract purchase price and multiply that by 1.75%. That should be a fairly accurate approximation, unless the community you are purchasing in has a CDD tax.
What is a CDD tax?
New communities sometimes have a Community Development District “Non Ad Valorem” tax as an additional line item on the tax bill. This usually ranges from $1000-$4000 per year depending on the community. If you are a first time buyer, it is very important to be aware of this as it could significantly affect your tax bill, monthly payment & even qualifying for a mortgage.
What are Ad Valorem and Non Ad Valorem taxes?
Ad Valorem Taxes are based on the property’s assessed value for tax purposes and Non Ad Valorem taxes are not. Examples of Non Ad Valorem taxes are waste management and Community Development Districts.
How does Homestead Exemption work?
State law allows Florida homeowners to claim up to a $50,000 Homestead Exemption on their primary residence. This reduces the taxable value in the following way: The first $25,000 of this exemption applies to all taxing authorities. The second $25,000 excludes School Board taxes and applies to properties with assessed values greater than $50,000.
What is Portability?
Portability is for people who are moving their homestead exemption from one home in FL to another home in FL. It allows you to transfer your current tax savings to the new primary residence. I recommend you use the Miamidade.gov tax estimator to calculate the amount of tax portability you will receive.
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I am not a real estate attorney and this is not to be construed as legal advice. This is just information for the public based on what I have learned being in real estate for the last 18 years.
By the way click here to see How to protect your deposit during a real estate transaction