Your Real Property Tax Bill When Selling or Buying Real Estate

Your Real Property Tax Bill When Selling or Buying Real Estate

If you have not received your 2018 tax bill from the tax collector yet, be assured it will be arriving soon. Whether selling or buying real property before the end of this year, you will want to look closely at the prorations of taxes on the closing documents. The tax bill will include ad valorem and non-ad valorem taxes.

Ad valorem taxes are based on the property value. Throughout Florida, ad valorem taxes are paid in arrears and based upon a calendar year. Non-ad valorem assessments are charges on the tax bill that are not based on the value of the property. Rather, they are charges within a certain district to defray part or all of the cost of providing a certain service or improvement, such as garbage collection or fire protection. You receive a discount on both ad valorem and non-ad valorem taxes if you pay the taxes prior to March 31, 2019.

Who pays for the ad valorem and non-ad valorem taxes when you are closing before December 31, 2018?

Ad valorem: The Contract terms and provisions will provide if prorations are calculated as of the day before Closing or on Closing Date. Once you have this information, prorating ad valorem taxes is straightforward, as they are paid in arrears and are based on a calendar year.

Non-ad valorem: Prorating non-ad valorem taxes is not as simple because some may be paid in advance and others may be paid in arrears. Also, some may be based on a calendar year and others on a fiscal year. Therefore answers to two questions are required before prorating the non-ad valorem taxes:

1. Is the non-ad valorem assessment paid in advance or in arrears?
2. Is the assessment period a calendar or fiscal year? Several property appraiser websites in Florida will list the non-ad valorem taxing entities and their assessment periods.

Once you have answers to these two questions, the non-ad valorem taxes can be properly prorated.  Review the closing documents (specifically, the Closing Disclosure) to confirm both the ad valorem taxes and non-ad valorem assessments are prorated separately.

The real estate attorneys at the law firm of Becker have experience reviewing and negotiating all types of real estate contracts, as well as reviewing closing documents and the calculations set forth therein.  We have offices throughout Florida and in New York, New Jersey and Washington D.C. Please contact me at 239-628-4937 or tread@beckerlawyers.com for more information.