Topic 18.2: Tax Districts, Budget, and Tax Rates

Learning Objectives

After successfully completing this topic, you will be able to
• compute the property tax on a specific parcel, given the current tax rate, assessed value, eligible exemptions and transfer of assessment limitation difference (save our homes portability) if applicable,
• list the steps involved in the tax appeal procedure, and
• describe the purpose of Florida’s Green Belt Law.

Budget for Tax Districts

The city, county, and school board prepare an operating budget for the next fiscal year that starts July 1. The budget shows the expenditures that must be made in the following year. The task of each entity is to determine where the funds will come from to generate enough revenue to pay the expenses. Because the variable amount will come from ad valorem taxes, the entity will first determine the income from other sources.

Example of Ad Valorem Tax Budget
In Leon County, the total expenditures in the 2019 budget were $263,600,200. The county got funds from several different sources, such as $11 million for licenses, $24 million in state funding, $23 million for services provided. All those funds totaled $124,117,800. That left $139,482,400 ($263,600,200 – $124,117,800) to get from ad valorem taxes. If the total value of properties is $16.8 billion (the tax base), here’s the way the county finds the millage rate:  

Dollars needed from property Taxes  = $139,482,400 / Assessed Value of All County Property  $16,800,000,000    = .0083 or 8.3 mills

Exemptions from Property Taxes

Immune property 

Immune properties are not even assessed. City, county, state and federal government properties are immune from taxes.

Exempt or partially exempt property

Exempt properties include churches and charities. Other partial exemptions go to homeowners, surviving spouses, disabled persons, blind persons, and an agricultural green belt exemption.

Homestead exemption

The homestead tax exemption reduces the taxable value of a property provided owner resides in home as his/her primary residence. The owner gets only one homestead exemption. It works this way. From the first $50,000 in taxable value, the homeowner may exempt $25,000. If the house is valued for more than $75,000, the owner can exempt another $25,000 from city and county taxes (but not school taxes). If the assessment is more than $50,000 but less than $75,000, the owner will get a prorated portion of the exemption.

 Property 1Property 2Property 3
Assessed Value $38,000 $67,000 $78,000
Homestead Exemption-$25,000-$25,000-$25,000
Addt’l Homestead Exemption             0    -$17,000-$25,000
Taxable Value for City and county $13,000 $25,000 $28,000
  This section calculates School Board taxable value
Assessed Value $38,000 $67,000 $78,000
Homestead Exemption-$25,000-$25,000-$25,000
Taxable Value for School Board $13,000 $42,000 $53,000

Assessment Limitation—Save Our Homes (SOH) Benefit

Article 10 of the Florida Constitution limits (caps) annual increases in assessed value of homestead property to a maximum of three percent or the change in the Consumer Price Index, whichever is lower. No assessment shall exceed current fair market value. This limitation applies only to propertyvalue, not property taxes.

If the property is sold, caps and exemptions are removed at the end of the calendar year. Taxes for the following year are then calculated on the full just value. The property will benefit from the limitations of the Save Our Homes cap in the second year of the new owner’s homestead exemption. For example, if a property owner applies for and receives homestead exemption for 2021, the Assessed Value will be capped in 2022. When determining taxable value, exemptions are subtracted from the assessed value. The taxable value is then multiplied by the annual millage rate to determine the amount of tax due.

A change in property ownership resets the capped value to full assessed value. The increase due to the removal of the cap may substantially increase taxes, depending on how long the previous owner had homestead exemption.

The cap does not apply to properties that are not homesteads. Multi-family properties may qualify based on percentage of use. For example, if you own a duplex, live in one half and rent the other half to a tenant, only 1/2 of your property value will be capped.

The cap remains in effect upon the change of title due to divorce or death of a spouse if the remaining owner continues to live on the property as their permanent address.

Portability

The portability provision of the law allows homestead property owners to transfer the accumulated difference between assessed value and the just value.
• Upsizing – if the just value of the new homestead is more than the previous home’s just value, the entire SOH benefit value can be transferred, subject to the $500,000 limit.
• Downsizing – if the just value of the new homestead is less than the previous home’s just value, a percentage of the accumulated SOH benefit can be transferred, subject to the $500,000 limit.
• Time limit to port the SOH benefit to a new property is 2 tax years from January 1st of the last qualified homestead exemption, not 2 years from the date of sale.
• Only one tax year with no homestead exemption is permitted in order to transfer your SOH benefit.
• Application for Portability must be submitted before March 1st.

Example:
If you sell your homestead property this year, the homestead exemption remains with that property until December 31. The last qualified homestead exemption was January 1 this year, so you now have until January 1, two years from that date to qualify for a new homestead exemption and port the SOH benefit to your new Florida homestead property.  

Additional Exemptions on Homestead Property

There are several additional exemptions allowed by Florida law as shown in the table below.

Additional Exemptions on Homestead PropertyAdditional Amount Deducted from Assessed Value of Homestead
Blind Person$500
Surviving Spouse who has not remarried$500
Totally and permanently disabled nonveteran$500
Totally and permanently disabled quadriplegicHomestead property 100% exempt
Totally and permanently disabled first responder and surviving spouseHomestead property 100% exempt
Veteran at least 10% disabled, and to spouse who had been married to veteran at least five years$5,000
Veteran with service-connected disability (also applies to spouse)Homestead Property 100% exempt
Surviving spouse of veteran who died on active dutyHomestead Property 100% exempt

Calculating Taxable Value

The taxable value of a homestead property is calculated by deducting all the exemptions from the assessed property value.

Example of taxable value calculation
Assume a qualified homestead property is assessed for $50,000. The owner is blind and is a widower. What is the taxable value?  

Answer: The exemptions total $26,000 ($25,000 homestead exemption + $500 surviving spouse exemption + $500 blind person exemption). The taxable value of the home is $24,000 ($50,000 assessed value – $26,000 exemptions). 

Greenbelt law exemption 

Greenbelt laws protect farmers from excessive taxes because of location.

Greenbelt laws allow the value of agricultural land to be stated by a more favorable agricultural use value, protecting farmers from excessive taxes because of location. The law requires the county property appraiser to value the property strictly based on the land’s current character and use without regard to value that might accrue from potential commercial development.

Calculating Property Taxes

To calculate property taxes, multiply the property’s taxable value by the tax rate of the taxing authority. The tax rate is expressed in “mills” which is one one thousandth of a dollar ($.001). 25 mills would be .025 (which also happens to be 2 ½% of the value). Cities, counties, and school boards are limited to a maximum of ten mills, except for voted-on bond issues.

To convert mills to a decimal, move the decimal point three places to the left: 15 mills = .015. to convert decimals to mills, move the decimal point three places to the right: .025 = 25 mills.

Example of Property Tax Calculation

A qualified homestead property is assessed for $124,000 after the SOH benefit has been calculated. The owner is totally and permanently disabled from an automobile accident. His spouse is blind. The city tax rate is 9 mills, the county tax rate is 8.5 mills, and the school board tax rate is 10 mills. What are the property taxes on this home?

The important thing to note when calculating the taxable value is that the additional $25,000 homestead exemption (HE) is not applied to school board taxes.

 School Board TaxesCity and County Taxes
SOH Value$124,000$124,000
Less: Homestead Exemption$ -25,000 Note-only 1st HE$ -50,000 Note-both HEs
Less: Disability Exemption$      -500$      -500
Less: Blind Person Exemption$      -500$      -500
Equals Taxable Value$   98,000$  73,000
X Tax Rate    X  .010   X .0175   (.009 + .085)
Taxes for each entity       $980$1,277.50
          Total property taxes $980 + $1,277.50 = $2,257.50