Why Do Property Taxes Vary On The Same Priced Homes

Dated: April 24 2019

Views: 3431

Why do Property Taxes Vary on the same priced Homes?

Ok so I have to answer this question multiple times a week so I think there is a need for more public information on this highly confusing topic.

As a Real Estate Professional this is my simplified way of making sense of it. All numbers are approximate and the only way to get the closest property tax estimate based on the individual's circumstances and the individual property is through the Property Tax appraiser.  www.PASLC.org you can use the Property Tax Estimator but this gives a range. You would actually have to speak to a clerk and give the property address, and your exemption situation to get a truly close estimate. Even then they don't know what governments are going to do with budgets and tax rates and what your home will actually appraise at when it is reevaluated. So the best you can hope for is to get close. 

The way the property taxes work on real estate purchases is very complicated. But here is my best shot at helping you understand. If someone purchases a home say in 1985 for 75k and they live in it full time (6+months) and homesteaded it. They would be capped at no more than 3% inflation a year on taxable value so their home might be worth 200K in market price but can only be taxed at say 100k minus the 50k deduction so they may only have a 1k tax bill. Now someone that bought the same exact home at the same exact time as a vacation or rental home. They would have no exemptions or deductions (however currently there is a 10% value increase cap per year) so they would be taxed at the full 200k and have a tax bill of 4k. 

What this has to do with your purchase of the home is that when the bills come out in Nov they will be based on who owned the home Jan 1 of the year current year. So if you purchased the home with the1k tax bill and closed on May 1st your taxes at closing would be prorated from May 1st to Dec 31 based on the last tax bill (the seller would give you a credit for Jan1-April 30). Or the same for the home with the 4k tax bill. You purchased both for 200k but the taxes FOR THIS YEAR ONLY would be based on prior owner. This also makes a difference when getting a loan as the bank uses the last tax bill for amount to collect to start escrow account and collect monthly for escrow account to pay the bill at the end of the year.  

Now as of Jan 1, 2020  you would own the home and it would most likely be assessed for the purchase price or close to it so your tax bill from there on out would be based on 200k minus homestead exemption if you use as primary residence for 6+ months and so your bill in that situation with standard homestead exemption would be aprox 3k a year. 
All these numbers are aprox but pretty close to reality. 
NOTE: One pitfall to keep an eye out for is that in the case you purchase a home with a low tax bill and the mortgage company only collects escrow based on that bill. The first year you of course would be fine but the next tax year you would end up with a shortage at the end of the year when the tax bill came due and the mortgage company will assess your account the $2000 difference as well as start collecting the correct amount on your monthly bill for escrow so your mortgage payment in this scenario would jump up $333 a month until the shortfall was made up. Then once your account shortage was paid up you would start paying the additional correct amount of $166 more towards taxes.  There are some special taxing districts, some special assessments, advalorm taxes and some areas with county only taxes as well as there being additional exemptions available but this is the general idea. 
On any home I can let you know the situation by looking it up on the County Tax Records.  

You can call me any time for questions regarding Real Estate on the Treasure Coast of Florida (Indian River-St Lucie & Martin Counties). 
Dawn Burlace, PA, Realtor® The Burlace Team - Atlantic Shores Realty Expertise

772-444-6696 bus

954-707-0437 cell 



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Dawn Burlace

FULL TIME AGENTS- Winner of Top Producing Duo Team 2017 Dawn Is a Member of the Institute for Luxury Home Marketing and has over 12 Years of Real Estate Marketing experience. With a Background in sale....

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