As a Realtor® in Palm Beach & a Palm Beach appraiser dealing with new construction in Palm Beach County, I learned quickly how to estimate taxes in Palm Beach County. After a while you just consider a percentage of the purchase price, which was about 1.5% of sales price, but now is more like 2% in some areas. Now to be clear, taxes are NOT based on sales prices.. that was just my way of figuring it out to a rough estimate. Taxes are based on assessed value and calculated with the millage rate for that area. Assessed values are estimated by the Palm Beach Property Appraiser's office in this area. Your local property appraisers office would be applicable in your area. The millage rate is determined by your local tax authority. Royal Palm Beach (a city), has its own millage rate. Unincorporated Palm Beach County will have a millage rate for certain areas within it. (Thanks to Erlene at the Palm Beach tax collector's office for clearing that up!)
When you buy a house, you pay based on the taxes the person has been paying before you.. so hopefully you buy from someone who has been there for a while*¹*. Since homes' new assessed values are released around November, thats when your taxes make that 'jump' based on a new assessed value on a recent purchase.. so it depends when you buy. Best time to buy (for tax purposes and keeping your 1st year of payments down) is November, since you will pay based on the older/prior tax amount until next November.. ;) goood tip! After that you pay on the new assessed value, so get ready for a jump in your tax payment (or monthly payment if you escrow your taxes <--good idea) after a year or less.. depending when you buy in the year.
- *¹* Because here in Florida, we have "Save our Homes", which was implemented in 1992 to limit how much your taxes can go up from year to year.. to a 3% maximum. Before that, your taxes could go up much more every year and people, especially the elderly, were finding themselves unable to keep up and forced to sell.
So let's just to back up for a minute.. and relate this with a personal story. After all, don't we all love to talk about ourselves? ;) When we moved into our first house in Oct. 2003, I was appraising for a while so I thought I had a clue. I had my 'guess-timator' figured in my head (assessed value is about 80% of sales price, at that time). When I filed for Homestead exemption on Jan 1.2004, I asked the guy at the property appraisers office, You'll probably assess me for 80% of my sales price right? and hes responded "No, you'll be assessed at full sales price". yikes!! I thought.. Ok, I'll admit it, he rocked me for a minute.. but when our assessed value came back, I was pretty much right on target. cooool Now, over 3 years later, my assessed value is at 83.97% of my purchase price from 2003. NOTE: Assessed value is is given for the land and the building. Taxes are estimated on the assessed value of the building, not the land.
Ok, back to the facts. . Once you know you're new assessed value you can calculate your estimated taxes with the millage rate (not mileage for you car ;) which your local tax collector can supply you with for any given property. It may vary from neighborhood to neighborhood, but for the most part, within a given area there isn't much of a difference from what I have seen. Not always true though.. If you live near a city limit, the neighboring city's millage may be much higher. A lower sales price and smaller house in a higher tax base can cost you the same amount in taxes as in a nearby city's higher sales price and larger home! Do your homework.
And don't forget, if its your primary residence (aka the home you will live in and not an investment property) you can file for Homestead on Jan 1 of the following year after purchase.. which knocks $25,000 off your assessed value before you calculate the tax amount. What does this equal in my area.. about $510 per year. I remember talking to an elderly lady that was waiting for a long time to claim an extra $5,000 'widow exemption'. I said, so that is about 5(,000) * $20 (millage) = $100 / year. and she was like "Squeeze me, Baking powder?"..ok not really, but she did get up and leave when she saw that it translated to about $8.33 per month!
Millage rates are calculated in amounts per thousand dollars of assessed value. $200,000 Assessed value (divided by) 1,000 = 200. And again, they are determined by the local taxing authority.
So you can do this 1 of 2 ways,. and for this example, you get to see both ways:
#1: Assessed value (minus) homestead exemption (of $25,000) = _____ divided by 1000 = _____ * millage rate = estimated tax amount. see? easy-peasy-lemon-squeezy. Millage rates look like this: 20.417 for Royal Palm Beach.
- Sample: Sales price $250,000. Millage for that property is 20.417 (for Royal Palm Beach). (estimate the assessed at approximate 80%-85% of sales price for now).. $250,000 * .80 = $200,000 (minus) homestead of $25,000 = $175,000 (divided by 1000) = 175 (mulitply by the millage rate) 175 * 20.417 = $3572.93 (rounded).
#2: the Nick the Appraiser way.. Remember my rough estimator?.. 1.5% of purchase price? Well $250,000 * 1.5% = $3750! Much easier, and pretty accurate most of the time! I was about $14.75 off / month!
** A high five goes to David Podgursky for the reminder about the scenario where millage rates can differ greatly within a few blocks, from city to city (when your near a city border). This guy is on point!
Also, for tax history on a property or to look up property information, visit the Palm Beach Property Appraisers Office Website. (known as PAPA) just click on 'Record Search'. :)
Nick M -Realtor®-Appraiser in West Palm- South Florida Real Estate Appraiser
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Nick, I wish they would implement that "Save Our Homes" here in Connecticut. We go through re-valuation every 5 years, and the tax bite can be a lot more than 3%.
Great info, but the way I look at it, how ever it is figured I got to pay it, so I just close my eyes and write the check.