Property taxes - millage high. what am i missing?

Question

Closing on a property thursday and I called the property appraisers and millage rate is 25. 900,000(purchase price)x25 divided by 1000 = high taxes. I should have looked into it earlier but this cuts into my expenses and is thousands more than I anticipated. What should I do? Back out? Escrow lost is better than paying for a liability?  How often is petitioning for reassessment successful?

Andrew Syrios · Answer

Is that the standard millage rate around there? I would assume it is, but it's worth checking to see if something is off. Also, how much is the property assessed for? Sometimes they're assessed way too high and you can appeal the taxes and get them reduced. We do it with each property we buy, but that's usually because they need repairs. They go back up after two years. But occasionally the assessment (not the millage rate) is just absurd and we know we can bring it down after closing. That would only be the case if the assessment was substantially above your purchase price though.

Isabela Montalvo · Answer

In Miami-Dade County, a mentor of mine has said to take 80% of the sale price as an estimate of what the assessed value will become upon reassessment by the Property Appraiser come January 1st of each year.  So, in your case, the assessed value would be estimated at $720,000 rather than $900,000, and the tax bill would be estimated at $18,000 rather than $22,500.

A good tip that this same mentor told me is to have closing be as early in the year as possible (ideally January 2nd).  This will allow for nearly a full year of taxes at the previous and presumably lower assessed value.

Take these 80% and January 1st guideposts with a grain of salt.  Despite both of us being in Florida, different counties might have their own quirks, so do your due diligence on the tax laws in your county.

Shawnette Pankey · Answer

Are you calculating based on purchase price? Or assessed value? Property taxes are calculated using the county's assessed value, not the purchase price. Most county property appraisers have an online tool to calculate what your property taxes will be.

Mike Barone · Answer

@Sama Pa It would depend your overall strategy. Is the additional 83$ per month going to put you in the red? Where you able to pick up any equity spread on the purchase? I personally would not buy another property that does not cash flow. It got me 2 times already and not going to make that mistake again. (Just my opinion if I was going to buy and hold)

On another note I did try and petition my tax rate with Broward county a few years back and was unsuccessful. That was my first and only try. It has been a while and now that you reminded me, I might just try again. :)