Estimate Property Taxes
In 1994, “Save Our Homes” (SOH) was enacted into law to protect Florida’s homesteaded residents by limiting annual increases to a property's assessed value to a maximum of 3%. As the years of homesteaded ownership go by, the market value of the home rises (or falls), but the assessed value of the home will never rise more than 3% annually. Over time, especially in a rising market, the difference between market value and the capped assessed value can be quite significant, creating a substantial property tax benefit to the homestead owner.
However, the legislation also states that when a property changes ownership, the assessed value must reset to market value in the year after the change of ownership. In other words, the new owner only benefits from the seller’s level of assessed value and property taxes through the year of purchase, resetting to market value as of January 1 of the next year. Because of this reset, a new buyer is caught off-guard when they assume their real estate taxes will be like those of the prior owner.
Florida Statute 689.261 requires the seller to provide a Property Tax Disclosure Summary to the prospective buyer (most commonly included in the purchase contract), informing them not to rely on the seller’s current property taxes as an expectation of what their property taxes will be following a change of ownership. To help you calculate what those property taxes may be, our office created a Tax Estimator that is available on our website. This tool allows buyers (and their lenders) to more accurately estimate property taxes under new ownership. The tax estimator works for both first-time buyers and relocating buyers as it considers any benefit they may receive from transferring their SOH benefit.
We want you to be fully informed about Florida’s property tax laws so you can enjoy your dream home as a resident of Pinellas County for many years to come!
