Property taxes are a fact of life. Property taxes are paid every year, with the money for property taxes held in escrow so the funds are available when it’s time to pay property taxes. Florida currently ranks number 23 for the amount of property taxes collected. According to Taxrates.org, “the median property tax in Florida is $1,773.00 per year for a home worth the median value of $182,400.00.” The report goes on to state that “counties in Florida collect an average of 0.97% of a property’s assessed fair market value as property tax per year.” In Florida, property taxes are assessed in November of the year in which they are due, but what happens when you close on a new home? How are property taxes handled at a closing in Florida.
Property Taxes at a Closing in Florida
In Florida, property taxes are paid in arrears. As mentioned above, property taxes are not assessed until November of the year in which they are due. This means that if your closing takes place anywhere between January and the first week of November, the amount of the current years property taxes will not be known. For this reason, property taxes are based on the previous year’s tax amount. Tax proration divides the property taxes between buyer and seller, with the buyer responsible for taxes up until the property is sold to the seller. Since the property taxes are based on the prior year, when the tax bill finally arrives, all parties involved should re-prorate the taxes to determine who owes what. During the closing process, all parties typically sign a re-proration agreement stating that property taxes will be re-calculated when the tax bill arrives. It is typical at closing to use the maximum discount allowed when prorating taxes.