Property Tax Codes 101

Property taxes are a fact of life. However, Florida offers its residents some tax breaks for business owners and property managers. Florida does not have an income tax, inheritance tax, or estate tax, but it does have a variety of property tax laws.


How Does Florida Property Tax Work?

All taxes collected in the state of Florida are used by the local government where the property resides. Each property is assessed a fair market value (a.k.a. “just value) on January 1 of each calendar year. An increase in property tax cannot be more than 3% higher than the previous year.


Property Tax Exemptions for Individuals

The state offers a few exemptions to help lower tax bills for homeowners. The first is the Homestead Exemption of up to $50,000 when a property owner makes the home their primary residence. 

Florida also has exemptions for veterans, widows, and widowers, as long as they have not remarried. Those exemptions can save the homeowner $500 off their tax bill. 


Property Tax Exemptions for Businesses

When a piece of real estate is labeled with specific property tax class codes, the state may reduce the amount of tax depending on the use of the real property. For example, land and buildings used for conservation, continuing care, charitable organizations, hospitals, affordable housing, charter schools, nonprofits, and educational purposes these properties are subject to property tax exemptions. Sometimes the tax breaks are significant.


Property Tax Redemption

If you fail to pay your property taxes or even a utility bill for the home, the municipality can place a lien on your home and eventually sell the lien or the property at auction. But you can use a foreclosure redemption to reclaim your property.

Under Florida law, you can redeem your property (repurchase it) by paying the person who bought it auction the back taxes owed or the price they paid for the property (often equal to the unpaid taxes). In some cases, you can buy back your home before the auction sale becomes final, so the purchaser never takes ownership of the title. 


Taxes Exceeds Proceeds

If the property is sold at auction, the tax assessor will estimate taxes and penalties. If the sale proceeds exceed these estimates, the homeowner will receive a check for the difference within 90 days of the auction. 


Like-Kind Exchanges

According to IRS code 1031, if you sell a property and use the proceeds (capital gains) to purchase a similar property for the same use, you can defer paying the taxes. However, understand that this is a tax deferment, not an exemption. 


Property Tax Help

Property tax laws in Florida are complex, and there are many subtle nuances that you may not realize could help you or your business. Contact Haber Law today if you have questions about Florida tax class codes and laws. We specialize in real estate law and topics related to real property.