Frequently Asked Questions

WHAT THE NAR SETTLEMENT MEANS FOR HOME BUYERS AND SELLERS

HOW ARE PROPERTY TAXES CALCULATED

CALCULATING PROPERTY TAXES ON A NEW PURCHASE IN MIAMI, FLORIDA
Property taxes in Miami-Dade County, Florida are calculated based on the property’s assessed value and the local millage rates.
Here’s how it generally works for new purchases:

1. ASSESSED VALUE: The Miami-Dade County Property Appraiser determines the property’s assessed value as of January 1st each year. For a new purchase, this assessment will typically be based on the market value at the time of purchase or after any new construction is completed. It’s crucial to understand that the initial assessment might be based on the vacant land, and a reassessment will occur once the home is built or transferred, which can lead to a higher tax bill.
2. MILLAGE RATES: Local taxing authorities (county, city, school district, etc.) set the millage rates, which are the tax rates applied to the assessed value. A mill represents $1 per $1,000 of assessed value. Miami’s property tax rate is generally around 2% of the assessed property value.
3. CALCULATION: The property tax is calculated by multiplying the assessed value by the millage rate (and dividing by 1,000).
   • For example: If the assessed value is $400,000 and the total millage rate is 20 mills (2%), the property tax would be $400,000 / 1000 * 20 = $8,000.

Factors affecting your new purchase property tax bill

• JUST VALUE VS. ASSESSED VALUE: The just value is the market value, but for new homeowners, the assessed value will be reset to the just value on the January 1st following the sale.
• HOMESTEAD EXEMPTION: If the property will be your primary residence, you can apply for the Homestead Exemption. This exemption reduces the taxable value of your home, potentially saving you a significant amount. You must apply for the homestead exemption by March 1st of the tax year for which the exemption is sought.
• SAVE OUR HOMES (SOH) ASSESSMENT LIMITATION: Properties with a homestead exemption benefit from the SOH cap, which limits the annual increase in assessed value to 3% or the Consumer Price Index (CPI), whichever is lower.
• NON-AD VALOREM ASSESSMENTS: These are additional assessments for specific services, like solid waste collection or streetlights, and are not based on the property’s value.
• PORTABILITY: If you’re moving from another Florida homesteaded property, you may be able to transfer a portion of your Save Our Homes benefits to your new home, further reducing your property tax liability.

IMPORTANT: It’s essential to consult with a local real estate agent or tax professional to get a precise estimate of your property tax liability based on the specific property and local tax rates in your desired location. You can also utilize online tax estimator tools offered by Miami-Dade County. Remember to apply for any exemptions you may qualify for to ensure you maximize your tax savings

WHAT IS HOMESTEAD EXEMPTION?

Property owners in Florida may be eligible for exemptions and additional benefits that can reduce their property tax liability. The homestead exemption and Save Our Homes assessment limitation help thousands of Florida homeowners save money on their property taxes every year. Further benefits are available to property owners with disabilities, senior citizens, veterans and active duty military service members, disabled first responders, and properties with specialized uses. The resources below provide general information on these exemptions and benefits.

When someone owns property and makes it his or her permanent residence or the permanent residence of his or her dependent, the property owner may be eligible to receive a homestead exemption up to $50,000. The first $25,000 applies to all property taxes, including school district taxes. The additional exemption up to $25,000 applies to the assessed value between $50,000 and $75,000 and only to non-school taxes. (see section 196.031, Florida Statutes)

If you are filing for the first time, be prepared to answer these questions:

• Whose name or names were on the title on January 1?
• What is your social security number and your spouse’s social security number?
• Were you or your dependent(s) living in the dwelling on January 1?
• Do you claim residency in another county or state?

Your property appraiser may ask for any of the following items to prove your residency:

• Proof of previous residency outside Florida and date ended
• Florida driver license or identification card number
• Evidence of giving up driver license from another state
• Florida vehicle license plate number
• Florida voter registration number (if US citizen)
• Declaration of domicile and residency date
• Name of current employer
• Address listed on your last IRS return
• Dependent children’s school location(s)
• Bank statement and checking account mailing address
• Proof of payment of utilities at homestead address

If you are a new Florida resident or you did not previously own a home, please see this brochure for information for first-time Florida homebuyers.

A surviving spouse of a first responder who died in the line of duty may receive a total exemption on homestead property. Click on this brochure for additional information.

Click on this brochure for additional exemptions.

For more information visit: https://floridarevenue.com/property/pages/taxpayers_exemptions.aspx

WHAT IS PORTABILITY?

Many property owners are unaware of the potential property tax savings when Moving from one Florida homesteaded property to another. Homesteaded owners may move their Save Our Homes benefit – up to $500,000 – if they establish a new Florida Homestead within three tax years of the full abandonment of Homestead at the previously Homesteaded property.

Portability does not require the sale of your previous home, but merely that all owners of that home no longer receive Homestead Exemption on it. This benefit will not automatically transfer to you so please make sure you submit an application for Portability when applying for Homestead Exemption at your new home.

For more information about Portability, please visit: web.bcpa.net or call 954-357-6830

WHAT DO FLOOD CODES MEAN?

The Federal Emergency Management Association (FEMA) puts out “flood maps” that show which areas in Florida tend to be most prone to flooding. People often ask, “is the property in a flood zone?” Usually people describing homes in low-risk areas will say “no, it’s not in a flood zone.” The correct answer is that every property is in a flood zone. It’s just a matter of whether it is in a low, moderate or high-risk flood zone. You can sometimes find a properties flood zone code on the property tax record or your insurance agent will use a Flood Insurance Rate Map or FIRM, to ultimately determine your properties flood risk. It’s important to know that Federal law requires you to purchase flood insurance if you have a federally backed mortgage and reside in a high-risk area.

Florida Flood Zones Explained
Below is a break-down of the various flood zones in which you may find a property located.

Moderate to Low Risk Areas
(Flood insurance is not required, but recommended)

Zones B, C, and X
These are flood zones with a less than 1% chance of flooding each year.

High Risk Areas
(Flood Insurance is Mandatory)

Zones A, AE, A1-A30, AH, AO
These areas have a 1% chance of annual flooding and a 26% chance of flooding over 30 years.

Zone AR
This is a flood zone with an increased temporary risk due to the construction or restoration of a levee or a dam.

Zone A99
Areas with a 1% chance of annual flooding that will be protected by a levee or dam where construction has reached specified legal requirements.

Helpful links:
https://www.mapwise.com/maps/florida/hazards.php
https://www.fema.gov/flood-maps

WHAT IS A 1031 EXCHANGE?

A 1031 exchange is a tax deferment strategy that allows you to defer such taxes as capital gains, depreciation, recapture, state and possibly the NIIT taxes on business use or investment properties when they are sold, and the profits are reinvested into another business or investment use property. www.real1031.com

More than a decade ago, the IRS released rules on deferred exchanges known as Section § 1031. Under the Florida 1031 exchange law, real estate owners held for investment or used in a trade or business can swap their property tax-free for “like-kind” real estate. Qualifying like-kind real estate includes apartments, rental houses, retail properties, and office buildings, among others.

Florida 1031 exchanges are made for those who want to keep investing in real estate and avoid paying high taxes upon a property sale. Saving on capital gains tax puts an investor on the road to wealth. That is why a 1031 Exchange is so important: without it, an investor pays taxes every time they move from one investment property to another. If you’re buying or selling real estate, 1031 exchanges allow investors to trade real properties for other ones without immediately incurring any capital gains taxes. However, this only applies if the exchange is completed within a set period of time and the profit from the transaction is reinvested in a like-kind property of equal or greater value. The following are some of the most common 1031 exchanges in the state of Florida.

Delayed Exchange
Delayed exchanges are the most straightforward and commonly used type of 1031 exchange in Florida and all across the country. In a delayed exchange, you sell your property and then later purchase a different property. This kind of exchange includes a 45-day identification period and a 180-day completion period.

Reverse Exchange
As implied by their name, reverse exchanges are essentially delayed exchanges but are conducted in reverse. In a reverse exchange, you would first purchase a replacement property then sell the original property. These exchanges are less common than delayed exchanges because property owners must use cash for the purchase.

Simultaneous Exchange
Simultaneous exchanges are the oldest kind of 1031 exchange and can be slightly risky. In a simultaneous exchange, the sales of both properties must close at the same time. Any delay could disqualify the exchange and result in full taxation.

Improvement Exchange
A construction or improvement exchange permits individuals to improve their replacement property using the profits from the original property sale. At the same time, a qualified intermediary holds the property deed in a trust for up to 180 days.

WHAT IS SENATE BILL 4-D?

• Creates new requirements for condo/co-op buildings 3 or more stories tall to ensure buildings are safe for continued use.
• Requires associations to conduct milestone structural inspections and structural integrity reserve studies.
• Milestone Structural Inspections: Inspection performed by a licensed engineer/architect to determine a building’s life safety and structural integrity.
• Structural Integrity Reserve Studies: a study of reserve funds required for future major repairs based on a visual inspection of common elements.