Planning on moving to South Florida, or already living in the area? Understanding how South Florida Property Taxes work can help you make an informed decision about where to live and how much money you'll need for your monthly budget. In this article, we'll cover property tax rates and exemptions in Broward, Palm Beach, and Miami-Dade counties.
Property taxes are a levy placed on real estate holdings assigned by local governments. The tax is based on the estimated market value of your property and goes toward funding public services such as police and fire protection, library systems, schools, road repairs, etc.
If you are planning on buying property and moving to South Florida, knowing what your property taxes would be is an important factor in deciding how much you can afford.
Broward County is a large county and includes major cities like Fort Lauderdale, Hollywood, and Pompano Beach. The average property tax rate in Broward County is1.98578%, but this amount varies depending on the city. Every city has a different millage rate at which they tax property. If you use the average rate throughout the county, you can see that the property taxes are roughly $1,985.78 per $100,000 of property value.
It is also important to note that property assessment takes place every year. This means any addition or improvements made to your property can further increase your property taxes. Property taxes can also increase if the assessed value of the property increases which tends to happen every year.
Palm Beach County is the third-most populous county in Florida and includes cities like West Palm Beach, Boca Raton, and Boynton Beach. Every city has a different millage rate at which they tax property, so make sure you reference this page to know how much taxes will be in the city in which you are interested.
Palm Beach County is ranked 232nd out of all US counties and usually has one of the highest median property tax rates in Florida. Just like Broward, property assessment takes place every year and any addition or improvements made to your property, or increase in market value can increase your property taxes.
Miami-Dade County is the most populous county in Florida and home to major cities like Miami, Coral Gables, and Homestead. Like Broward & Palm Beach Counties, the millage rate that your property is taxed varies between cities.
Because of the Homestead Exemption which is part of the Florida Constitution, homesteaded property cannot have an increase in property taxes more than 3% in any one year. If the housing market is really hot and property values increase by 20%, as was common in 2020-2022, you can sleep easy knowing your property taxes will not increase more than 3% that year. This plays a big factor over time where property values increase much faster than the taxable values.
When someone purchases a property, the Buyer assumes the Seller’s taxes for the year the property was purchased. The tax bill will be prorated on the closing statement so that each party pays their prorated share of the year’s taxes.
If a buyer buys a home from a Seller that has owned it for a very long time, they will likely have much lower taxes in the first year of ownership. However, property taxes in every County are reassessed the year after a sale to the new market value based on the purchase price.
Buyers getting a mortgage will have much lower taxes in the first year of ownership, but may be surprised by a much higher mortgage payment in year 2. Make sure when purchasing a property you factor in what taxes will ultimately be, not just what they are in year 1.
Understanding Homestead Exemption and Portability
In Florida, homestead exemption and portability allow homeowners to lower their property taxes by exempting a portion of the value of their primary residence from property taxes.
A homestead exemption is a tax break that is automatically applied to the primary residence of a Florida resident. The basic exemption is $50,000 which means that the first $50,000 of your property's value is exempt from taxes. This means that the basic homestead exemption saved a Broward homeowner in 2022 anywhere from $644 to $1,034 (depending upon your city's millage rate) in annual tax savings. Some counties may also offer additional exemptions for veterans, seniors, or low-income residents.
Portability is a feature that allows homeowners to transfer their homestead exemption savings to a new primary residence within three years of selling their previous home. This means that homeowners can take the amount of savings they received on their previous home's property taxes and apply it to the taxes on their new home.
To be eligible for homestead exemption, you must be a Florida resident and the property must be your primary residence as of January 1st of the tax year. To take advantage of portability, you must have received the homestead exemption on your previous primary residence, must apply for the portability within three years of the sale of your previous home, and the new home must be your primary residence as of January 1st of the tax year.
It's important to note that these rules and exemptions can change over time and may vary by county, so it's best to check with your local property tax office for more information and to confirm the current rules and exemptions.
There are several benefits to understanding property taxes as a homeowner in South Florida:
- Budgeting: Knowing your property tax rate can help you budget for the cost of owning a home. You can estimate how much you will need to pay in property taxes each year and factor that into your overall cost of homeownership.
- Comparison: It can also help you compare the cost of owning a home in different areas. If you are considering buying a home in a new area, you can compare the property tax rates in that area with those in the area where you currently live to get an idea of how much more or less you will be paying in property taxes.
- Negotiations: It can also be beneficial when you are negotiating the purchase price of a home. If the property tax rate is high, you may be able to negotiate a lower purchase price to account for the cost of the taxes.
- Tax Planning: South Florida property taxes are important for tax planning as well. If you itemize your deductions on your tax return, you may be able to deduct the amount of property taxes you paid during the year.
- Portability: If you are planning to move and your new home is in Florida and want to take advantage of the portability and apply homestead exemption savings to a new home, you need to know the property tax rate to calculate your savings.
Homeowners, or those who want to buy a home in South Florida, should make sure they understand the property tax rate and exemptions available to them. By understanding these rules, you can budget better, compare costs across counties, negotiate the purchase price of a home, better plan your taxes, and take advantage of portability. This will not only help you save money, but also ensure you know your rights as a homeowner.Posted by Andy Mandel on