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property tax closing costs in FloridaProperty tax closing costs in Florida

Property‌ ‌Tax‌ ‌Closing‌ ‌Costs‌ ‌in‌ ‌Florida:‌ ‌What‌ ‌You‌ ‌Need‌ ‌to‌ ‌Know‌ ‌

07 Apr 2021

If you reside or own any property in the United States, it is virtually impossible to stop dealing with taxes. Both the federal government and most states have income taxes, even though regulations and rates widely vary from case to case.

 

While Florida residents do not have to worry about income taxation, they are still exposed to property taxes – which includes the taxes required during the close of a real estate transaction.

 

In this article, you will find out what you need to know about property tax closing costs in Florida. 

 

Property Taxes in Florida – The Basic Concept  

 

In Florida, property taxes are paid yearly. The money collected from taxpayers is held in escrow to ensure there will be funds available when it is time to pay the due taxation. Currently, the Sunshine State is still a relatively low-tax state, especially when it comes to per capita state taxation. 

 

All property taxes are collected on a county level. Hence, each county has its method of evaluating and collecting the due taxes. 

 

Plus, the state is still ranked as the 23rd in the nation in terms of the average amount of property taxes collected. The average property tax in Florida is an annual $1,733.00, considering a home worth a median of $182,400.00 in value. 

 

While the nationwide average property tax rate is 1.1% of the average home value, Florida counties collect an average of 0.97% of the average home value per year. 

 

Property Taxes at a Closing in Florida – Understanding the Process 

 

At the state level, property taxes are not assessed until November of the year in which they are due. 

 

Consequently, anyone involved in a real estate transaction in which the closing is concluded between January and the first week of November, will not know the current year’s required amount of property taxes. 

 

To prevent taxpayers from failing to pay the owed amount, property taxes in Florida are based on the tax amount required on the previous year. 

 

For instance, if you are involved in a real property transaction in which the closing was concluded in March 2021, you will pay a tax amount according to the amount applied in 2020. 

 

What Party Is Responsible for Paying the Property Tax During the Closing of a Property in Florida? 

 

In Florida, property taxes are divided between the buyer and the seller during a real estate transaction. To ensure fairness to both parties, the state applies a “property tax proration.”

 

Tax proration is a manner used to split property taxes fairly, ensuring that each side is paying for the period that they own the property. 

 

Given that property taxes in Florida are paid in arrears, tax proration ensures that the buyer is fairly compensated for the tax bills of the period in time in which the seller still owned the property.

 

Until the transaction is officially settled, the seller has full responsibility for dealing with the property taxes. 

 

Property Tax Closing Costs in Florida – How to Calculate the Required Amount? 

As stated before, the property taxes in Florida are based on the amount required in the previous year. 

 

This way, when a tax bill arrives, the parties involved in a real estate transaction should re-prorate the taxes to determine which party owes what. 

 

It is worth noticing that the parties involved in real estate transactions commonly sign a re-proration agreement during the closing of a property in Florida. A re-proration agreement provides that all property taxes must be re-calculated at the date the tax bill arrives. 

 

What is the Best Way to Deal with Property Tax Closing Costs in Florida? 

 

Dealing with property taxes during a real estate closing in Florida can be a stressful and time-consuming situation, especially when you have to calculate all the related costs. 

 

Hence, the best way to ensure you will have the property tax in place before, during, and after the closing is to work with an expert title and escrow company

 

At Marina Title, we will guide you throughout the whole closing process. Our real estate attorneys will clarify any questions you may have, helping to ensure compliance with all laws and regulations. 

 

Anticipating Is Essential – Work with Marina Title and Ensure a Smooth Closing in Florida 

 

Florida has a dynamic and competitive real estate market, which means buyers/investors must be prepared to deal with property taxes during the closing of a property. 

 

Waste no time with uncertainty. Call us today at (305) 901-5628 or email us at Romy@MarinaTitle.com to schedule a consultation.

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