I get a lot of first time home buyers that ask the question, “Why are they asking so much? The tax appraisal is only listed at $xxx,xxx?”
Well, as most homeowners know, tax appraisal has little to do with how much your house is actually worth. You see, the tax appraised value is really only somewhat accurate after the sale of said property when the tax appraiser goes in and adjusts the value to coincide with what was just paid for the property. After that there is a cap on how high the tax appraised value can increase each year.
If this is your primary residence, then you need to apply for a homestead exemption. What this exemption does is two things.
First, it limits the amount your home value can increase for tax purposes. It currently caps the increase to a maximum of 3% per year. Even if home values are rising at a higher rate.
Second, you do not have to pay taxes on the first $50,000 of your home's value. So if your home has a tax appraised value of $100,000, then you only have to pay taxes on $50,000.
You can only claim this exemption on 1 house, though. So if you have a house in Ohio and another one here in Florida, you can only claim the homestead exemption on one of those houses. Choose wisely.
For homes that do not have a homestead exemption, as of the 2009 tax roll, Florida put a cap of a 10% increase to those houses. That does not mean that your home will increase that much every year. It means that it can not increase more than 10% from year to year. Even if the market value of your home has increased at a higher rate.
So the next time you look at a tax appraised value of a home that you are interested in, take it with a grain of salt. Tax Value and Market Value are 2 completely different things. Tax value is not an accurate value of the home, and besides, as soon as you buy that house, it will change to reflect a value closer to what you paid for it.