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When you're buying a home, property taxes can feel a bit confusing, but understanding them is crucial. In this post,
Miami-Dade Property Taxes Explained: First-Time Homebuyers vs. Current Homeowners, we’ll cover the key differences between how taxes apply if you're a first-time homebuyer diving into the market versus a current homeowner selling your property to purchase another. Let’s break it down in simple terms so you know what to expect in each situation.
Property Taxes for First-Time Homebuyers
If you’re buying your first home, let's say in Kendall, congratulations! But
before you get too far into celebration mode, it’s good to know how your
property taxes are calculated.
As a first-time buyer, your property taxes are based on the purchase
price of the home, not the assessed value. So, what exactly is assessed value?
It’s the dollar value that the local tax assessor assigns to your property for
tax purposes.
Over time, this value changes based on factors like market
conditions or improvements made to the home. However, as a first-time buyer,
you don’t need to worry too much about this initially because your taxes will
be calculated based on what you paid for the home—your purchase price.
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Millage Rate: Now, let’s talk about the millage rate
(sounds fancy, right?). It’s basically a tax rate set by your local government,
and it’s applied to the purchase price to figure out how much property tax you
owe. This rate can vary depending on where your home is located, so you’ll want
to check what it is for your specific area.
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Homestead Exemption: If you’re buying a home in Florida
and it’s your primary residence, you can apply for the
Homestead Exemption.
This gives you a bit of a break on taxes by reducing the taxable amount of your
home. In most cases, this exemption can knock off up to $50,000 from your
home’s taxable value, which means you pay less in property taxes.
Fun Fact: The Florida Homestead Exemption
is a great way to save some cash when you’re a new homeowner in Miami-Dade.
Heads-up: You might be tempted to look at the current
owner’s property tax bill and think you’ll be paying the same amount, but
that’s not the case!
Property taxes don’t stay the same when a home changes
hands. The seller may have been paying taxes based on a much lower assessed
value if they owned the home for a while. So, while you’ll start by paying the
taxes the previous owner was responsible for, you’ll get a fresh tax bill
that’s based on what you paid for the house.
In Miami-Dade County, the property assessor sends out the
new tax bill in November after the sale, so be prepared for an adjustment later
in the year.
For example, let’s say you purchase a Kendall home in March for $700,000,
and the previous owner was paying property taxes on an assessed value of
$300,000 because they owned the property for several years. For the first few
months after your purchase, you’ll be paying property taxes based on the
seller’s lower assessment, which could be significantly lower than what you’ll
owe after the reassessment.
However, when November rolls around, the property assessor
will recalculate your taxes based on the purchase price of $700,000 and a hgher property tax bill.
Property Taxes for Seasoned Homeowners Selling and Buying
Again
Now, if you’re already a homeowner and you’re looking to
sell your current place to buy another, you’ve got a different situation.
Let’s
say you’ve been in your current home in Kendall for a while—chances are, your taxes have
been kept lower thanks to something called the
Save Our Homes Cap.
This cap
limits how much your assessed value can go up each year, so your tax bill may
be based on a value that’s much lower than what your home is actually worth
today.
When you sell your home, there’s good news. In Florida,
you can take advantage of “portability”. This means you can transfer some of
those tax savings from your old home to your new one.
How much? Up to $500,000,
depending on the difference between your old home’s market value and assessed
value. This can give you a nice break on taxes when you buy your next home.
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Tax Reassessment on Your New Home: Just like first-time
buyers, your new home’s taxes will initially be based on what you pay for it.
However, if you’re able to port some of those savings from your old house, your
new home’s taxes could be lower than what a first-time buyer would pay.
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Homestead Exemption Transfer: You can also transfer your Homestead
Exemption to your new home, ensuring that you continue to enjoy those tax
savings. Just don’t forget to file for the exemption when you move!
And remember just like first-time buyers, you won’t be
paying the same property taxes as the seller of your new home. While you’ll
initially pay what they were paying, your new tax bill (which you’ll get in November
in Miami-Dade will be recalculated based on your purchase price, so it’s
important to plan for that.
What is the 2024 Millage Rate?
The current countywide millage rate in Miami-Dade for 2024
is 9.5878 mills, which is essentially $9.5878 per $1,000 of assessed property
value. This is a slight reduction from 2023, where the rate was 9.5962 mills.
On top of the countywide rate, specific municipalities have
their own additional millage rates. For example, in Miami, the city rate is
around 7.1364 mills, while other areas like Homestead have rates closer to
6.0206 mills.
Keep in mind that millage rates can vary depending on where
the property is located within Miami-Dade County, and properties may also be
subject to additional non-ad valorem assessments for services like fire rescue
or stormwater management.
Wrapping It All Up
Whether you’re buying your very first home or selling your
current one to move into another, property taxes play a big role in your
financial planning.
First-time homebuyers will pay taxes based on the purchase
price, while seasoned homeowners can transfer some of their tax savings from
their previous home, thanks to portability. And don’t forget: the seller’s tax
bill is not what you’ll be paying!
Be prepared for a reassessment, and plan
ahead for your tax bill to adjust after the sale.
If you’re thinking of buying or selling in Kendall or surrounding neighborhoods, feel free to reach out to me! I am bilingual in
English and Spanish. I’ll help you make
sense of all the details, including property taxes, so you can focus on finding
your dream home.