Florida Retirement Buzz

Finally, you and the seller have decided on a price for their Florida retirement home or condo. Its ten years old, but in immaculate condition. As a final check, you review the multiple listing sheet one more time before signing the Purchase and Sales Agreement. Last year’s real estate tax is listed and something doesn’t seem quite right about the amount based on what other homes in the same price range had listed for their taxes. It seems to be on the low side. Your real estate agent has failed to tell you about the constitutional cap on increases in real estate taxes and the effect that it can have when homes are sold.

In your case, assume that the seller purchased the home ten years ago for $100,000 and the taxes were $2000 per year ($20 per thousand). There is 3% annual cap on increases in Florida real estate taxes that would result in the current taxes being $2610 if they increased 3% each year. This would be the number on the multiple listing sheet. Now you are going to buy the house for $300,000 which is a realistic number based on past appreciation rates in many areas of Florida over the last decade. Furthermore, $300,000 will be the assessment for your new house . And if the rate is still $20 per thousand, your annual tax bill will be $6000 per year!! That represents quite a jump in taxes on the property.

When a property is transferred in Florida, its assessment is updated and taxes are applied to the current value. The tax treatment that the prior owner enjoyed does not transfer to the new owner. So keep this tip on near the top of your criteria list when closing a deal on your new retirement property.

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