Whether you are a homeowner, prospective buyer, or simply curious about the financial responsibilities of homeownership, understanding property taxes is crucial. In this blog, we’ll delve into key elements such as how property taxes work, why they matter, and how they impact both individual homeowners and the broader community. With Notices of Proposed Property Taxes (TRIM Notices) being issued this month, there is no time like the present to acquaint yourself with the ins and outs of property tax bills.
Property Tax Bill Breakdown:
In the State of Florida, property taxes are often split into two easily identifiable categories: ad valorem and non-ad valorem taxes. Depending on the county in which the property is located, services available to the home, and various types of liens, there may be more or fewer items listed under search taxation section.
Ad Valorem Taxes: These taxes typically have a greater impact on the property taxes imposed on a home. Ad valorem taxes are based on the property value, calculated as total millage points. The purpose of ad valorem taxes is generally for broader funding needs, such as property taxes and contributions to local government operations and infrastructure. While the county performs a reassessment on an annual basis, ad valorem taxes change most drastically when a home is transferred, and a new deed is recorded. In this situation, the purchase price of the home becomes the assessed value of the following year’s taxes. If you recently purchased a home, especially a new construction home, and your taxes jumped considerably beyond what the previous owners were paying, this is why! Curious how the county calculates the tax amount? Take the assessed market value of the home divided by 1,000, then multiply that number by the Total Millage listed on the tax bill. This is an easy way to calculate the estimated ad valorem taxes, especially if you are a prospective homebuyer. As for billing cycles, ad valorem taxes are paid in arrears, from January 1 through December 31 of the previous calendar year.
Non-Ad Valorem Taxes: These taxes are usually fixed amounts or unit-based pricing and are less likely to change drastically from one owner or year to the next. Non-ad valorem taxes are typically imposed to fund specific projects or services, such as waste and storm water management, fire rescue services, and other utilities available to the general community. Non-ad valorem taxes are paid in advance and billed on a fiscal year calendar – October 1 through September 31.
Special Line Items:
Depending on the community where the property is located, or certain types of liens that may have been recorded and attached to the property, buyers and sellers should take great care to review tax bills and ensure they are accurate. Common liens that are attached to the property rather than the owner include:
Florida PACE Green Energy Liens: Designed to help homeowners finance energy-efficiency and hurricane-resistant home improvements, recorded PACE liens attach to the property, rather than the borrower. Attaching to the property gives these liens a higher priority than most other financial liens, including mortgages, and can transfer from one owner to the next upon sale if not properly paid off. If a PACE lien is present, it will be reflected in the non-ad valorem section of the tax bill. Florida PACE Green Energy liens cannot be discounted, as they are levied against the property by a third party to recover a debt. Once the debt is repaid, the lien must be fully released for it to be removed from the tax bill. Failure to obtain the proper release for a PACE lien could result in a cloud on title and jeopardize your ownership interests.
CDD Fees: Community Development Districts typically exist where resort-style amenities are provided to a specific community – think community pools, tennis courts and clubhouses. CDD fees are a way for the community developers to offset the cost of maintaining amenities or continuing infrastructure development over the course of 20-30 years, without having to impose higher or additional Homeowners Association dues. CDD fees are reflected in the non-ad valorem section of the tax bill and cannot be discounted for early payment.
Federal Tax Liens: Failure to pay Federal taxes in a timely fashion can result in a lien that attaches directly to your property. Federal tax liens are listed under the non-ad valorem section of the tax bill and can remain present for a period of 10 years. Failure to properly repay the lien or oversight in recording the necessary discharge documents can result in the lien remaining on the tax bill, even in the event of a change in ownership. Upon full repayment, the IRS records the necessary release, and the lien is removed from the tax bill. Federal tax liens cannot be discounted, as they are levied against the property by the government to collect a debt.
Discounts and Payment Deadlines:
Generally, between county specific exemptions and early payment discounts, homeowners are eligible to receive some form of discounts on their property taxes. Brevard County offers an early payment discount, whereby homeowners receive a 4% discount for paying their property taxes in November when the tax bill officially becomes available. This discount decreases by 1% each month, until the bill becomes due in April, at which point it begins to incur interest for late payments. Other discounts include case-specific exemptions, which must be applied for through the county. Common exemptions include Homestead, Veterans, Seniors, Widow/Widower, Portability and discounts for persons with certain disabilities. For properties located in Brevard County, applications for exemptions can be submitted online through the Brevard County Property Appraiser’s website or by booking an appointment to visit one of their physical offices. The deadline to apply for exemptions is March 1, and appointments book up quickly. Do not leave this application process to the last minute, or you may find yourself paying higher property taxes than expected! For a full list of exemptions and eligibility, visit the Brevard County Property Appraiser’s website.
What are the consequences of not paying your property tax bill on time?
Failure to pay your property tax bill on time can lead to serious consequences such as hefty penalties, interest charges, and even the risk of losing your property through tax liens or foreclosure. It is crucial to prioritize timely payments to avoid these detrimental outcomes.
Whether you are a homeowner, prospective buyer, or simply curious about the financial responsibilities of homeownership, understanding property taxes is crucial. In this blog, we’ll delve into key elements such as how property taxes work, why they matter, and how they impact both individual homeowners and the broader community. With Notices of Proposed Property Taxes (TRIM Notices) being issued this month, there is no time like the present to acquaint yourself with the ins and outs of property tax bills.
Property tax bills can be overwhelming and difficult to understand. Whether you are a current homeowner, prospective buyer, or simply curious about the financial responsibilities of homeownership, it is crucial to understand the ins and outs of a property tax bill. If you believe there is an error on your tax bill or have specific questions about your bill, always contact the issuing county’s property appraiser’s office. The county appraiser’s office will be best equipped to handle property tax inquiries. If you believe a lien was not properly paid or was recorded against your property in error, contact our office to find out how our attorneys can help!