In Florida, the real estate taxes are prorated as of the date of the closing. This is generally a matter covered in purchase and sale agreements, but sometimes it’s memorialized in a separate agreement referred to as a tax proration agreement.
This is because there are typically two different taxing jurisdictions involved in a real estate transaction: local and state. The local taxes usually must be paid annually, while the state tax may or may not need to be paid annually depending on how much the actual assessed value of the property has changed.
At closing, both parties must agree to prorate their respective share of the taxes based on the date of closing.
Property taxes are an unavoidable aspect of daily life. A portion of the annual payment is set aside in an escrow account to pay property taxes when they become due. The assessment of property taxes takes place in November each year, but how are property taxes handled at closing in Florida?
In terms of the median amount of property taxes collected, Florida ranks 23rd out of the 50 states.
Taxrates.org reports that “A home valued at the typical $182,400 in Florida would incur a median annual property tax of $1,773. On average, each year, counties in Florida collect 0.97% of a property’s assessed fair market value in property tax revenue.”
How Are Property Taxes Handled At Closing In Florida?
Florida residents pay property taxes according to a schedule. As mentioned above, they only assessed property taxes in November.
Therefore, if your closing is scheduled for any time between the first week of January and the first week of November, you cannot know the amount of that year’s property taxes.
This is why the tax assessment from the prior year is used to calculate the tax for this year. The seller pays the property taxes up to the sale, and the buyer pays the remaining year’s projected pro-rated taxes according to the terms of the tax proration agreement.
Allow Title Assistants To Manage The Technicalities Effectively
The closing on a house may be a stressful experience for homebuyers, particularly those who are purchasing their first house. It requires a powerful individual to grasp every last nuance and see how it all fits together.
There are hundreds of details that need to be taken care of before closure can take place. If any of these are missing, the closure will be delayed or even cancelled. That’s why it’s crucial to choose a title and settlement services company like Title Assistants to get invaluable support.
In order to meet our deadlines, we focus on optimizing the effectiveness of our job. Moreover, we offer smart support due to our extensive knowledge of title, escrow management, and closing procedures.
Q: How Do Taxes Work When You Buy A House?
Most homeowners living in Florida pay their property taxes through an escrow account as part of their mortgage payment, but in either case, the taxes are deductible.