In Florida this is the time of year when property owners are notified of the amount of the real estate taxes to expect on the tax bill which will be sent the first of November. This notice know as a TRIM or “Truth in Millage” notice. For 2011 if proposed changes are adopted this should be equal on average around 5% lower property taxes than 2010 for properties whose values have not changed. If you do not see this drop in taxes, it is likely because the Property Appraiser’s Department has raised your assessed value!
How can they do this? Although the Market Value may have declined the “Assessed Value” (the amount used to calculate your taxes) increased because of the provisions Florida’s “Save or Homes” or Homestead Exemption legislation. Homestead Exemption provides that the assessment for residential properties, with Homestead Exemption, cannot increase per year by more than 3% or the Cost of Living, whichever is less. This can happen up until the Assessed Values and Market Values meet. But under no circumstances can your Assessed Value exceed your Market Value.
The other possibility is that the Millage Rate decreased less than the property’s value increased. Real estate taxes are calculated by multiplying the “Assessed Value” (or “Taxable Value” for Homesteads) by the “Millage Rate”. The “Millage Rate” is based on the amount of money local government needs from real estate assessments divided by the total “Assessed Values.” For example, if government needs $1,000,000 to operate and the total “Assessed Value” is $50,000,000 the millage rate is 20 mills or more simply 2.0% of “Assessed Value”. If government needs $1,000,000 and the total “Assessed Value” declines to $45,000,000 then the Millage rate will increase to 22 mills or 2.2%. Therefore, when “Assessed Values” decline and government needs remain the same the Millage rate will increase
Although the “Millage Rate” for all classes and types of properties in a government area are the same, the limitation on the increase in assessments under “Homestead Exemption” does not apply to non-homestead properties, for those properties there is now a 10% increase cap for the portions of your tax bill that are paid to the City/County/Region, but the cap does not apply to the School Board portion of which for the Taxable Value always equals Market Value, and is taxed on that amount. I know it’s confusing but at least you don’t need a CPA to calculate it for you just yet.
What can you do to make sure you are only paying your fair share of real estate taxes? If you believe your property assessment (value) is too high you can have us appeal on your behalf. We will review the county’s assessed values and compare against sales and income information to determine if a reduction is warranted and present this evidence to the Value Adjustment Board. Last year alone we saved our clients on average about 20% off their taxes.
However if you believe the millage rate is still too high you should attend the City and County Budget Hearing Meeting to express your feelings and demand sensible government spending. Our government needs to be held accountable for how they spend our tax dollars, and no one can do that but it citizens.
In addition a few things have changed for folks petitioning their real estate assessments. First, the state is now requiring that at least 75% of the taxes be paid before hearing the case. No more waiting until after the hearing to receive a revised tax bill. Second, refunds issued as a result of a Value Adjustment Board hearing after April 1st, will have accrued interest of 1% per month between April and the date of the refund.
The good news for 2011 is that we expect less people will be dissatisfied with their assessments as the Property Appraiser appears to be catching up with the market and drastically lowering values. However, times are still tough for commercial property owners, and with few arms-length transactions to base values off of, now more than ever, is the right time to review your assessed values based on income potential. Call us to setup a petition before the Sept. 15th deadline, and we’ll handle it from there. Alternatively you can CLICK HERE to apply online.