There is a certain excitement that comes when you beginning the hunt for your new home! You’ve got your checklist of all the must have’s and all the things that would be a deal breaker. Deciding to purchase a home is a big decision, probably one of the biggest you’ll make as an adult.
When buying a home there’s usually only one thing at the fore front of our thoughts Sales Price!! So much so that the whole search seems to revolve around how much the home is worth that buyers especially first time home buyers often overlook all the other expenses that come with owning a home the ones that can truly sneak up on you once it’s too late to back out.
Property Taxes…….Whenever I’ve put these two words together in a sentence I have yet to receive a positive reaction like “Great, can’t wait to start paying that on a yearly basis” if anything it’s the one topic buyers hope that by not bringing it up, will somehow go away. Unfortunately that is not the case. If there is one thing I can guarantee is that November will come around and that Property Tax Bill will be in your mailbox. One of the biggest misconceptions I hear is that the current property taxes paid by the the current owner will be the same amount the new owner pays. Again sorry not the case at least not in the state of Florida or Broward County. The truth is in Broward county the property taxes on a home will be reassessed when the property changes ownership. So that amount you happened to see on the MLS sheet your realtor may have given you will go up anywhere from 2% to 2.3% of the purchase price.
What do Property Taxes consist of?
Depending in what county or state you live in it’s important to know how your property taxes actually get calculated and by whom. In Broward county there are over 80 taxing authorities such as:
- Broward County School Board Utilities
- Waste Management
- Public Transit
Just to name a few. Property taxes in Broward are ad valorem which simply means they are based on the current just value of the home. You tax bill is then based on a tax rate set by the Broward County Board of commissioners. That tax rate also know as the millage rate is then applied to the assessed value of the home by the County Appraisers office.
Calculating you Property Taxes
The easiest way to calculate your property taxes when searching for your home is to take the current millage rate which is currently (2.11937%) and multiply it by the asking price of the home you have your eyes on.
EX: Asking price is $300,000
$300,000 X 2.11937% = $6,353.11 a year or $529.84 a month
Luckily there are several deductions that can be taken advantage of to lower that once a year bill. One the easiest ways that can save you as much as 4% by just paying early:
- 4% discount if paid by November
- 3% discount if paid in December
- 2% discount if paid in January
- 1% discount if paid in February
In the state of Florida homestead exemption states that state law allows permanent Florida homeowners to claim up $50,000 (for married couple) and $25,000 (for single homeowners) exemption on their primary residence. The first $25,000 of this exemption applies to all the taxing authority (remember the over 80 taxing authorities Broward county has) the second $25,000 excludes the school board taxes and applies to properties with an assessed value greater than $50,000.
This is just one of the expenses that come with owning your own home. If you planning on giving less than a 20% down payment be prepared to pay for mortgage insurance which can add an additional $100 or more to your monthly payment. If the home of your dreams happens to be within an HOA (Homeowner’s Association) that is an additional fee that will need to be included in your monthly expenses.
Giving yourself a realistic monthly amount will help eliminate homes that are truly out of your price range.