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City, county, school board, and numerous special tax districts are empowered to impose taxes directly on real property in Florida as part of the powers delegated to them by the state government. The U.S. Constitution prohibits the federal government from taxing real property, passing that right on to the state and local governments. Florida is one of the states, however, that does not tax real estate at the state level.

Property taxes provide the bulk of local government revenues in Florida. They account for a large portion of the revenue needed to provide law enforcement, fire protection, and other services. To guard against possible abuse of the power to tax, many states, including Florida, have either included provisions in state constitutions or enacted state statutes limiting the burden that may be placed on individual property owners.

Real estate taxes (commonly called property taxes) are based on the value of real property, hence the term ad valorem tax, which means according to value. State law requires that the county property appraiser assess real property for all levels of government, thus avoiding duplication and possible controversy. All real property assessments must be updated annually.

Property taxes in Florida are levied on a calendar-year basis. Taxes are paid in arrears (at the end of the tax year) for the period January 1 through December 31 each year. Property taxes become a lien on all real estate in Florida on January 1 each year. This lien is legally superior to any other lien, regardless of date. Taxes are payable to the county tax collector on or after November 1 each year. Property owners may pay property taxes in four installments or in a single payment. A discount system permits property owners to realize a discount through prompt payment of taxes. All payments made on or after March 1 must be for the full amount of taxes levied. Property taxes for the previous year become delinquent on April 1.

Property taxes are levied against land and all improvements to the land. The assessed values of the land and improvements are arrived at separately and then combined to reflect a single assessed value. The state supreme court has interpreted Florida Statutes as requiring that all real property be assessed at just value, the fair and reasonable value based on objective valuation methods. In arriving at a just valuation, county property appraisers take into consideration property characteristics such as location, size, and condition of the property. The county property appraiser also considers the highest and best use of the property and, if income producing, the income generated from the property. Just value, for ad valorem purposes, may not conform to market value, but it is calculated in relation to a market value base.

Property appraisers apply three approaches to value: the sales comparison, cost-depreciation, and income approaches. If the property is sold during the year, the sale price becomes a factor for consideration in assessing the value of the property, but it is not the controlling factor. Representatives of the property appraiser's office typically go into the community to assess property, collecting data using specific forms and recording procedures. The information obtained from field trips is then processed through a computer, using appropriate valuation formulas to render an objective estimate of assessed value. Assessed value is the value of a property established for property tax purposes. Check with the county property appraiser or a representative of that office for the necessary procedures if you wish to protest the assessed value of your property.

Every fiscal year, each tax district (city, county, school board, or special tax district) prepares an operating budget for the next fiscal year. The operating budget prepared by each tax district is actually a summary of several departmental budgets. For example, the police department submits a budget that reflects the estimated cost of operating every phase of that department's activities during the coming fiscal year. The same process is followed by public works, health, welfare, finance, fire, and all other departments or agencies. When consolidated, all of the individual department budgets make up the total city or county budget for the next fiscal year.

With the budget in hand, the tax district knows just about what to expect regarding expenses for the next year. The next issue is obtaining sufficient revenue (income) to pay the expenses. No elected official is eager to levy higher property taxes than are absolutely necessary to operate the tax district. So before a general real estate tax is calculated, an attempt is made to estimate the revenue that can reasonably be expected from all sources other than real property taxes. Each tax district may have different or unique sources of income, ranging from outright federal grants to profits resulting from municipally owned utilities. Fines paid in courts, parking meter income, fees from occupational licenses, and tax funds returned by the state government are a few of the other sources of income. Estimating the amount of income from these non-property tax sources is made easier by records of preceding years, which indicate a predictable trend.

With a reasonable estimate of the revenue expected from all non-property tax sources, the tax district is able to predict the amount of money needed from property taxes. The amount of property taxes paid to a tax district must come from its tax base, the total assessed value of all taxable property in the tax district. The next component needed to compute a tax rate is the number and type of property tax exemptions granted.

Two categories of property, immune properties and exempt properties, are not included in the taxable property tax base. Immune properties are government buildings (city, county, state, and federal government properties) plus special categories that have been made immune by a statute or ordinance, such as municipal airports. Immune properties are not even assessed and are not subject to taxation. Exempt or partially exempt properties include homesteads and property belonging to churches and nonprofit organizations. (there may be additional special exemptions). Exempt properties are subject to taxation, but the owner is released from the obligation.

Some properties are granted partial exemption, for example, properties qualifying for the homestead tax exemption. For this reason, one cannot always regard the assessed value of a property as the taxable value of that property. The taxable value of a property is not known until existing exemptions are subtracted from the assessed value. Taxable value (nonexempt assessed value) is determined by beginning with assessed value and subtracting appropriate exemptions.

Any person who has legal or equitable title to real property in Florida and who resides on that property as his or her permanent legal residence is eligible for a $25,000 homestead tax exemption from the city, county, and school board assessed values. Homeowners are not required to live on the property year-round, but it must be their principal residence. If title to the property is in the name of one spouse alone, the other spouse may legally file for this exemption with the consent of the spouse who owns title to the property.

To obtain the homestead tax exemption, first-time applicants must apply in person at the county property appraiser's office with proof of home ownership on or before March 1 of the first year in which they claim the exemption. In some Florida counties, new owners must file between January 1 and March 1: in others, new owners may file year-round. In either case, application must be made on or before March 1, and the applicant must have owned the home as his or her principal residence on or before January 1. Thereafter, the procedure for renewal of the homestead tax exemption varies from county to county. Some counties require that homeowners sign and return a renewal notice sent to them each year; other counties automatically renew the exemption by sending a receipt requiring no action by homeowners unless a change in status or information occurs. The property tax exemption for a homestead is deducted from the assessed value of the property before property taxes are calculated.

Example: Suppose you bought a home that is assessed at $80,000. Assuming that you have qualified for homestead tax exemption, what is your taxable property value?

The homestead exemption does not exempt property from taxes levied by special tax districts such as fire, hospital, or flood control.

An unremarried widow or widower who is a bona fide resident of Florida on January 1 of the year claimed is eligible for this exemption. If the spouse remarries, the eligibility expires. If a divorce occurs before the death of a spouse, the divorced individual is not eligible for this exemption. This exemption allows a surviving spouse to deduct an additional $500 from the assessed value of his or her homestead to determine taxable value.

Any veteran who, on January 1 of the year claimed, is at least 10 percent disabled by military service-connected misfortune is entitled to this property tax exemption. The $500 exemption also applies to any totally and permanently disabled nonveteran. When filing for the first time, applicants must present proof of their disability.

Requirements for Establishing Homestead Tax Exemption

The requirements for establishing a homestead tax exemption are as follows:

A recorded deed, recorded contract for deed, or property tax bill must be presented in the homeowner's name, plus two of the following: a Florida voter registration card, a Florida driver's license, a declaration of domicile, or a Florida automobile tag registration.]
Title to the property must be held as of January 1 of the year of application.
The family must reside on the property and claim it as their principal residence as January 1 of the year in which the exemption is claimed. (Note: Physical presence is not the equivalent of residence, based on a recent court case in which the 4th DCA held that a property owner who was placed in a nursing home was entitled to renew her homestead exemption even though she was not physically present there.)
The initial exemption must be applied for at the county property appraiser's office in the county where the real property is located in the manner and at the time designated by that county.