When a house is sold, the property's value for tax purposes rises to whatever the property appraiser considers fair market value for that year.
If you are buying a house, don't expect to pay the same property taxes as the former owner. In fact, it might be wise to expect a dramatic increase in your tax bill next year.
Because of a state constitutional amendment, annual increases in the taxable property values of owner-occupied homes have been capped for the past four years. Each year, the values are allowed to rise no more than 3 percent or the inflation rate, whichever is lower.
But when a house is sold, the cap is not in force, so the property's value for tax purposes rises to whatever the property appraiser considers fair market value for that year.
Home buyers need to be aware that what the former owner paid in property taxes "is not gospel," Hernando County Property Appraiser Alvin Mazourek said.
Many people pay their tax bill with their mortgage and are required to keep a year's worth of property taxes in their lender's escrow account. For them, the effect of a higher tax bill on their monthly payment can be dramatic.
Not only will the monthly payment go up to pay for the higher taxes in one year, but the new owner also will be required to add more to the escrow account.
It is not uncommon for property appraisers to get calls from new homeowners who are shocked when they get their first tax bill.
"They assume (when they see the former owner's tax bill) that it will stay that way forever," Citrus County Property Appraiser Ron Schultz said.
Home buyers should be able to plan ahead for the increase by checking with the property appraiser's office before closing. Don't just take the estimated tax bill figure supplied by the real estate agent for granted when budgeting. Instead, look at the difference between the property's "market value" and "assessed value."
The assessed value, the amount which is capped by law, is the amount the former owner paid taxes on. The "market value" is what the property appraiser says the land is worth. If there is a big difference in those numbers, there's a good chance your taxes will increase substantially. But remember that the market value could change next year if the property's value increases or decreases in the meantime. Tax increases by cities or counties also could change the bottom-line amount you pay.
A buyer can ask the title company, which closes the home sale, to use the actual property value rather than the capped one to calculate the escrow amount and the monthly payment.