Why Did My Property Taxes Increase? What New Homeowners Should Know.
After purchasing a home, some new homeowners are surprised by the noticeable increase in their property taxes. Buyers are often alerted to this change when they receive a notice that their mortgage payment will increase to cover the escrow shortfall. The average new homeowner is shocked and unaware that this could happen. Potential buyers need to understand why this occurs, especially in a state like Florida. This article will explain the reasons for property tax increases, the significance of exemptions such as the homestead exemption, and what buyers should expect.
The Basics of Property Tax Increases
When you buy a home, the county or local assessor usually reassesses the property’s value. This new assessment often results in higher property taxes. This happens because properties are reassessed at their current market value when sold, which may be higher than the previously assessed value. The previous owner’s taxes were probably based on an outdated assessment that didn’t reflect current market conditions.
The Homestead Exemption and Its Impact
The Florida Homestead Exemption is an essential element in property tax calculations. It allows homeowners to exempt a portion of their property’s value from taxation, reducing the home’s taxable value. For permanent residents, the exemption can be as much as $50,000. Additionally, the Save Our Homes (SOH) cap limits annual increases in assessed value to 3% or the rate of inflation, whichever is lower.
However, when a home is sold, the SOH cap resets and the property is reassessed at full market value. This reset can result in a significant tax increase for the new homeowner.
Other Exemptions and Tax Relief Options
Florida offers various property tax exemptions beyond the Homestead Exemption, such as those for seniors, veterans, and individuals with disabilities. Buyers should explore these options to determine their eligibility and potential tax savings.
What Buyers Should Expect
Buyers should be prepared for a reevaluation and potential tax increase when buying a home, especially if the previous owner had lower taxes due to exemptions like the SOH cap. To avoid unexpected costs, buyers should ask for a tax estimate based on the expected sale price before finalizing the home purchase.
Conclusion
After purchasing a home, property taxes often increase due to reassessment and resetting exemptions such as the Save Our Homes (SOH) cap. By understanding these factors and preparing accordingly, buyers can confidently address these changes. Consulting with a local tax professional or real estate expert can provide personalized advice based on specific circumstances.
Learn More About Property Taxes
For more in-depth information on property taxes and how they may increase after purchasing a home, check out these sources:
- Florida Department of Revenue: Property Tax Information
This guide provides detailed insights into Florida’s property tax system, including exemptions and reassessments. - Quicken Loans Guide on Property Tax Increases
Learn more about the common reasons behind property tax increases and what you can do to prepare as a new homeowner.
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