One of the most common surprises for Florida homebuyers comes after closing, when they discover that their property tax bill may be significantly higher than the seller’s current taxes. Beginning February 1, 2027, a new Florida law is designed to give buyers a more realistic picture of potential property taxes before they purchase a home. For Realtors, this is an important change that will affect how property tax information is presented to prospective buyers and discussed during the home buying process.
Why the Seller’s Current Tax Bill Can Be Misleading
Florida Realtors have probably encountered this situation before. A buyer sees that the seller currently pays $4,000 per year in property taxes and assumes that his or her taxes will be approximately the same after purchasing the property. Unfortunately, that may not be the case.
A longtime Florida homeowner may have benefited from years of Save Our Homes assessment limitations. The seller may also have exemptions that will not automatically transfer to the buyer. As a result, the seller’s assessed value can be substantially below the property’s current market value. Following a sale, the property is generally reassessed for the following tax year. This can result in a significant increase in property taxes for the new owner.
What Changes Beginning February 1, 2027?
Beginning February 1, 2027, Florida law will require certain online residential property listings to provide prospective buyers with an estimate of the property’s ad valorem taxes. Importantly, the estimated taxes are not supposed to be calculated using the current owner’s assessed value or existing property tax amount. Instead, the estimate generally uses the property’s listing price and applicable millage information.
The goal is to provide buyers with a more realistic estimate of what property taxes could look like following the purchase. The law also generally restricts the inclusion of the current owner’s property tax amount in printed listing materials. This is significant because displaying the seller’s current tax bill without appropriate context can create a misleading impression about the buyer’s future cost of ownership.
Why This Matters for Buyers
Property taxes are a significant component of a buyer’s monthly housing expense, particularly when taxes are escrowed as part of the mortgage payment. A buyer who budgets based upon the seller’s existing property taxes could underestimate the true monthly cost of owning the home. A substantial increase following reassessment can affect affordability and create an unwelcome surprise after closing.
Providing an estimated tax amount based upon the listing price should help buyers develop a more realistic understanding of potential property taxes earlier in the transaction. However, Realtors should also make clear that the amount provided is still an estimate. The buyer’s actual property taxes will depend upon the ultimate assessed value, applicable millage rates, exemptions, portability benefits, special assessments, and other factors.
The Takeaway
Do not let the seller’s current property tax bill become the buyer’s expectation. Beginning February 1, 2027, Florida’s new property tax listing requirements should give buyers a better starting point for evaluating the true cost of homeownership. Realtors should understand how the new estimated tax information works, explain that the amount is only an estimate, and encourage buyers to investigate their anticipated property taxes as part of their overall affordability analysis.
A few minutes spent discussing property taxes before closing can help prevent a much more difficult conversation when the buyer receives the first tax bill after closing. For additional information, contact your trusted real estate attorney. It matters who you work with.
