Why Did My Florida Property Taxes Go Up After I Bought? Homestead, Save Our Homes and Your Escrow

A common question from Florida first-time buyers is why their mortgage payment jumped in year two. Often the servicer reported a large escrow shortage, even though they had already filed for homestead. A common cause is that Florida resets a home's taxable value when it sells. Here's how it works, using guidance from the Florida Department of Revenue and federal escrow rules.

Why are my taxes higher than the previous owner's?

Every Florida parcel has three values (Florida DOR, PT-107):

• Just value: the market value
• Assessed value: just value minus any assessment limits, such as the Save Our Homes cap
• Taxable value: assessed value minus exemptions, such as homestead

When a home changes ownership, Florida law requires the property appraiser to remove the prior owner's exemptions and reassess the home at just value. That takes effect January 1 after your purchase. The seller's homestead exemption and Save Our Homes benefit stay with the property only for the rest of the calendar year you buy in. If the seller owned the home for years, the reset can be large. The Pinellas County Property Appraiser notes it can double or even triple the taxes (PCPAO).

Why did my escrow payment jump in year two?

At closing, your escrow is usually set up from the current tax bill, which may reflect the seller's exemptions. Federal rules generally limit servicers to estimates based on the charge they know about or the prior year's charge (12 CFR 1024.17(c)(7)). When your first bill on the reassessed value arrives, two things happen:

1. A shortage. Last year's deposits weren't enough to pay the new bill.
2. A higher monthly escrow amount going forward, to cover next year's bill.

Under RESPA's escrow rule, if the shortage equals or exceeds one month's escrow payment, the servicer may let it stand or spread repayment over at least 12 months. Many servicers also let you pay it in a lump sum to lower the new payment (12 CFR 1024.17(f); OCC). Rising insurance premiums can add to the same increase. See our homeowners insurance guide.

Florida's property tax calendar

Knowing the calendar explains when the surprise shows up (PT-107): - January 1: county property appraisers assess all property as of this date. - August: the appraiser mails the Notice of Proposed Property Taxes (the "TRIM notice"). - Late October or November: the tax collector mails the bill. - By March 31 of the next year: taxes are due.

Your servicer usually pays the bill from escrow, so your first annual escrow analysis after that bill is where a shortage typically shows up.

How does the Florida homestead exemption work?

If the home is your permanent residence, the homestead exemption can exempt up to $50,000 of assessed value (Florida DOR, PT-113):

• The first $25,000 applies to all property taxes, including school taxes.
• An additional exemption of up to $25,000 applies to assessed value between $50,000 and $75,000, for non-school taxes only. That second amount is adjusted for inflation.

Exemption amounts can change by constitutional amendment, so check your county property appraiser's site for the amounts in effect when you file.

Deadline: file Form DR-501 with your county property appraiser by March 1 of the tax year. You must have owned the home and made it your permanent residence on January 1 of that year. Many counties accept applications online.

When does the Save Our Homes cap start?

Not in your first homestead year. After the first year a home receives the homestead exemption, its assessed value can't rise more than 3% or the change in the Consumer Price Index, whichever is less, each year (Florida DOR, PT-112). The DOR's example: a buyer who applies by March 1 sees the exemption on that year's bill, and the cap begins the following year.

Can I bring my Save Our Homes benefit from my old Florida home?

Possibly. Portability lets many Florida homestead owners transfer all or part of their accumulated Save Our Homes benefit to a new Florida homestead. You must establish the new homestead within three years of January 1 of the year you gave up the old one (not three years from the sale), and file Form DR-501T with your DR-501 by March 1 (PT-112). First-time buyers and people moving from another state have no benefit to transfer.

How do I estimate taxes before I buy?

• Don't budget from the seller's tax bill. The DOR suggests asking your lender, your agent or the county property appraiser, and many appraiser sites have a tax estimator for new buyers (PT-107).
• Ask your loan officer to qualify you on the estimated post-sale tax, not the seller's bill. That number affects your debt-to-income ratio (DTI guide).
• Set money aside for a possible year-two escrow shortage.
• Read your TRIM notice each August. If you disagree with the value, contact the property appraiser first. Formal appeals go to the county Value Adjustment Board.

How Skyline Mortgage helps

We build your payment estimate on realistic post-purchase taxes and insurance, not the seller's old bill. Compare FHA, VA and conventional options, read our escrow account guide, or start at our Florida mortgage broker page. Contact us or call (407) 663-4743.