This is not financial advice. Everything below is strictly Belloise Realty’s opinion and general information, not a recommendation for your situation.
Investors buying on the beach are often surprised by their first property tax bill. A rental or second home doesn’t get the homestead exemption or its Save Our Homes cap, and the assessment resets after a sale. Here is how property taxes work on non-homestead property in Florida and what to plan for.
Key takeaways
- Homestead property’s assessed value can rise by no more than 3% a year, or the change in CPI if lower.
- Non-homestead residential property has a 10% annual cap on assessment increases, which doesn’t apply to school taxes.
- After a sale, the assessment resets to market value the next January 1.
- Don’t budget using the seller’s tax bill, which may reflect years of capped growth.
Homestead vs non-homestead
| Homestead (your main home) | Non-homestead (rental or second home) | |
|---|---|---|
| Exemption | Homestead exemption | None |
| Annual cap | 3% or CPI, whichever is lower | 10%, not applied to school taxes |
| After a sale | Resets, then capped again | Resets, then capped again |
| Portability | Possible to a new homestead | Not available |
Why the seller’s bill can mislead
If the seller has owned the home for years, especially as a homestead, the assessed value may be far below today’s market value. When you buy, the Property Appraiser reassesses the property at market value as of the next January 1. Your first full tax bill can be noticeably higher than the seller’s.
Our tip: Ask us to estimate taxes from the purchase price rather than the current bill. The Pinellas County Property Appraiser also has an estimator on its website.
Planning for it
- Estimate taxes from your purchase price and current millage rates.
- Expect the assessment to rise in later years, up to the 10% cap on non-school taxes.
- Review your TRIM notice each August. Our TRIM notice guide explains it.
- Pay early for a discount. See our guide to early payment discounts.
Our opinion
In our view, property taxes belong next to insurance and association dues as the costs that most change the math on a beach rental. Run conservative numbers before you buy. Our guide to the costs of owning a vacation rental lists the rest, and our homestead exemption page explains the full-time residence side.
Not financial advice: This is not financial advice. It is strictly our opinion, for general information only. Talk to a licensed financial adviser, accountant or attorney before making investment decisions.
Planning an investment purchase? Contact us.
Sources
- Florida Statutes, section 193.155, Save Our Homes assessment limitation.
- Florida Statutes, section 193.1554, assessment of non-homestead residential property.
- Pinellas County Property Appraiser, exemptions and tax estimator.
- Florida Department of Revenue, property tax information.