• Palm Beach Property Taxes With Brian Mudd

Palm Beach Property Taxes

This is the Treu real estate 911 podcast with Lisa Treu. Lisa will share up-to-date real estate information with you that you need to know.

Brian Mudd:

Welcome to Treu Real Estate 911. It's Brian Mudd, along with your local real estate pro, Lisa Treu. And as always, you're going to have the most up-to-date information about the Palm Beach County real estate market right here. And if you're not already on the Treu website, you'll always find it there as well, TreuRealEstate911.com. Once you go there, it all makes sense. You can search the MLS in real time like a real estate pro. Not to mention, you can see all of the helpful information the Treu's always have that's up to date and ready to go for you right there. And even sign up for the updates so that when there's new information, you're the first to know.

Brian Mudd:

And Lisa, before we get going on today's show, which is a special one, we're going to talk about Palm Beach County's proposed property taxes, a subject that is near and dear to everyone and also one that often is misunderstood, especially for folks who are newer to our area. And that's something that, over the course of time, you've done a great service helping educate the folks that you work with about what they are looking at when they are taking a look at their proposed property tax statements and understanding the implications as well when one is purchasing a home, say, that was homesteaded. What are your thoughts as we are taking a look at our proposed property tax statements and the overall look of real estate market right now?

Lisa Treu:

Well, one of the things that I think that people don't understand is they look at the taxes of a home that they're buying, what it is right now. But they're forgetting to look at what it most likely will be when they purchase it in a year. We have had people that didn't use us to buy a property call us a year or two later being forced to sell their home because they could not afford their property taxes. For example, they buy new construction. There's almost no taxes, right? It's very affordable on vacant land. 

Lisa Treu:

I think they're more responsible with the questions. They just don't always know the questions to ask. I think it's important to give great information that people understand how to read the tax information that's available. The website is excellent. And there's a great amount of information. You can read about portability, which is another huge gift. I didn't have that the last time I moved. And because of that, my taxes went to very affordable to very expensive. We always remind our people moving especially out of palm beach county to take their portability with them, if they have it. Because a lot of times, people don't realize that it's not about Palm Beach County, right? That if they move to Tallahassee, they can take that portability with them. I just think that people want to make good decisions, they just need to have the right information. And let's face it, if you're like me where I haven't moved for many years, you may not realize what portability means to you because the last time you moved, that wasn't even an option.

Brian Mudd:

Right. That's a good point.

Lisa Treu:

Yeah. We just want to give our buyers and sellers great quality information.

Brian Mudd:

By the way, if you ever have questions for the Treu's, they're always available for you seven days a week, 561-972-8326. That's 561-972-8326. And I am blessed to have portability and homestead exemptions, but also I still take a look at that proposed property tax assessment every year. And I still grind my teeth a little bit, but I don't hold it against you. Palm Beach County's property appraiser, Dorothy Jacks joining us now. I appreciate you taking the time with us on today's show. And first, just to give us an overview about the typical proposed assessment that people recently received in the mail.

Dorothy Jacks:

Well, thanks so much for having me. It's a pleasure to be with you. The proposed tax notices go out in mid-August every year. And it's meant to really share three different things with you. One is what your taxes will probably be this year. Two, what the market value is of your property. You have an opportunity, if you wish, to petition the value, in other words, protest the value, that it's higher than you were expecting or that it should be. And third, also just to let you know what benefits your receiving, whether that's homestead exemption, or portability benefit, or any of the cap benefits that are available. It's a great notice to take a look at the whole thing, but those are the three primary parts of it.

Brian Mudd:

Now, when it comes to the overall assessment itself, the timing of what people are looking at, that often is something that is confused. This isn't the real-time assessment of one's value. We're taking a look at something that happened previously.

Dorothy Jacks:

Correct. The Florida law requires that we value every property as of January 1st of that year. Even though we're now in late August, and that's when we mailed the notices, which is also set by law, we are looking at, "What was the value?" What we were trying to hit as the value around January 1st. And what that really means is it's based on market data from 2017. It's even older than the eight months you hear about. It's actually based on, "What did the market tell us during the entirety of 2017?" Let's look at that, and then let's come to what we feel the value of your home is worth on January 1st 2018, and then you get that notice in August. We are behind, if you will. We're not the best source for current market information. In fact, I often say the best source are real estate professions because they certainly know a lot more about the current market than our office does because of this requirement that we look at January 1st as the tax date.

Brian Mudd:

Obviously, throughout the Palm Beaches, we have a lot of diverse real estate, everything from Palm Beach to the Glades and all of the different communities in-between. But on average, what did the average assessment show for this past year?

Dorothy Jacks:

Well, as you said, that's so diverse in the real estate. And it's hard to say what the average assessment was. But overall, if we took the entire tax roll and bundled it together, we saw about a 6% increase in value for the entire county. Now, that takes into account commercial property, vacant land, industrial property, et cetera. But for most home owners, especially if you're in a neighborhood that's popular, and steady, and in a good location, you probably saw an increase in your market value this year.

Brian Mudd:

Lisa, speaking about that real-time information, four folks that are wondering what it's looked like, 6% proposed increased from 2017, what has the market looked like so far in the first eight months of this year?

Lisa Treu:

Well, we've had an interesting real estate market this year. You know, people say, "What's the market doing?" Well, the answer is, "It depends."

Brian Mudd:

Everything.

Lisa Treu:

Right? Pretty much. And yet, there are some areas where not only have we seen a very much increased activity, but we're projecting even more in that the luxury market, I think, is going to continue to get a little bit better, which is much needed, right? I also think that those areas where the north east buyer is going to be interested in, once again, we're going to see an increase in activity there. There's some definite optimism, in my opinion, in some of the real estate markets. Anything under 300,000 is really hard to keep out there. In singlefamily homes, let's face it, there's not a lot of that left now as our median price continues to increase. And yet, there are homes that I see ...

Lisa Treu:

And I'm sure everybody who is on any of the sites has seen price reduction after price reduction after price reduction. We have really a very local market right now where we have super hot, and we have warm, and then we have some super cool markets. Town homes and condos often are falling in more of those cool markets, warmish markets, so it's really important to have an agent who understands locally and to get that pricing just perfect.

Brian Mudd:

You're listening to Treu Real Estate 911, and we are doing the show on the proposed property taxes. And we're joined today by Palm Beach County property appraiser, Dorothy Jacks. And Dorothy, Lisa mentioned portability and homesteading. They are so critically important to so many folks and have been to maintain affordability over the course of time as we have seen significant increases in property values. For those who might be newer and not fully aware of this, what's this portability thing? And also, the extent of the homestead exemption, if you could explain that a little bit.

Dorothy Jacks:

Sure. You know, homestead exemption has been around a long time and is probably the easiest thing to explain. It's a benefit for people who make Florida their primary home. You can own multiple homes, but you have to declare one of them as you're primary residence. You have your driver's license in Florida, you register your cars in Florida, you vote from Florida, and you probably file your taxes from Florida. And that defines you then as a Florida resident. Once you hit that status, you can apply for this nice property tax benefit called "homestead."

Dorothy Jacks:

Homestead is actually a $25,000 reduction in your market value first, then it's the second $25,000 reduction if your value is between 50 and 75,000 for a total of about $800 in savings. There's a third homestead proposed on this year's ballet, and I can tell you a little bit more about that. But once you have the homestead designation, once you're a homesteader, you begin to accumulate a cap on the amount that your property increases year over year. It's called the 4% cap, although it's not always 3%. The law says 3% or the change in the CPI, whichever is less. This year, it's actually 2%. Values this year, if you are homesteaded, only went up 2%, which causes us to only actually see a 2% increase in our ad valorem tax, the tax based on value.

Dorothy Jacks:

Now, over the years as you stay in your home, your market value continues to rise. One of the duties of our office is to keep track of that market value. But your capped value based on that cap increment is staying lower. The difference between those two numbers, between market and capped, or what's called on our website, assessed, is your portability benefit, your potential benefit. Portability, which was introduces in 2008 by the voters who approved it, allows you to actually port that benefit, that difference between market and capped to another homesteaded property anywhere in Florida.

Dorothy Jacks:

Now, there's a lot of rules around portability. If you are going from a lower value to a higher value, you can take your whole portability benefit. If you're downsizing in your property, say moving to a condo, you can only take the proportionate benefit as a relationship of the old value to the new value. What I mean by that is, say your new home is only worth 75% of your old home. You only get 75% of the port differential to take with you. You have to do this within two tax roll cycles, which is often somewhere where people get caught up. And you only have a maximum of half a million dollars you can port. Some people, believe it or not, have more than that, but it maxes out at 500,000. This is all incredibly involved, it sounds like. Doesn't it? And it is. There's no question, but that's what we're here for. That's what our office does all day is help people understand it better.

Brian Mudd:

Well, you just had as good of an explanation as I've ever heard with all deference to our old friend, your predecessor, that was very well done. Now, when it comes to putting together the property taxes, often you're viewed as the boogey man for the people that are unhappy. But there's so much more than just what your office does. Obviously, it's a covet upon you and your taxed with fair property assessed values. But then also, you have all the various different communities. We have well over 40 different taxing districts throughout the Palm Beaches, which can be that much more confusing. If you can explain how the municipal or unincorporated governments come into play to put together that full picture of what people are looking at.

Dorothy Jacks:

Absolutely. And that's the beauty of the proposed tax notice that everyone just received. And the top half of that form, it really goes into detail of the taxing authorities that you are paying. Your tax bill isn't just a simple $2,000 bill. It's actually made up of usually somewhere between 10 and 15 parts. And each of those are distinct taxes paid to distinct authorities, whether that's a city. If you live in a city, the county, the county fire rescue, there's a library district, there's a health care district, there's a fined district, which is Florida inland navigation district that manages the Intracostal Waterway. There are all kinds of districts, and each of them are outlined on that notice. And the beauty of that is you can call each one of them or go to their public meeting. A part of the notice is disclosing when their public meeting will be held. You can go and say, "Hey, your rate went up a lot this year. Why is that? What additional service am I going to get because your rate went up?"

Dorothy Jacks:

But you asked about the unincorporated, and I think it's important to mention too, also on the notice, ad valorem taxes. These are taxes not based on value, probably the most well-known one, solid waste authority. Garbage assessment is not about the value of your home. It's really about, "How many times does the truck have to come by your house, lift your garbage, and then take it out to the dump?" It's really based on a unit tax. My home, which might be bigger than your home, will pay the same simply because it cost the same for the truck to come by and pick up those cans, that my house is your house. That second half of the notice is becoming much more interesting. These days, you see a lot more taxes moving onto that second part because a lot of governments, including cities, are using that as a way to bring in revenue that's not so much based on value and try to, in many ways, make it a little more fairer in that the tax is based again on a use as opposed to, "Because your home is worth more than my home, you pay more."

Dorothy Jacks:

I always, again, recommend people, really look at that section. Phone numbers are there. If you don't know what that district is doing, call them and say, "Can you just tell me what this money is for?" And if it's gone up a lot over last year, it tells you what last year's is. Call them and say, "Why has it gone up? What are we paying for?" There are some very, very legitimate reasons. I don't want to in any way imply that it's not for good reasons. For instance, a Loxahatchee Groves voted to assess themselves to improve their roads. They had a lot of washout this year in the big storms. And they have just decided to self-assess so that they could bring in the revenue to improve their roads. residences are seeing a higher tax because of that. There's good reason, it's just becoming informed about the reasons.

Brian Mudd:

Well, I appreciate your explanation, and you're encouraging people to become informed about those line items, something that I have very much been [inaudible 00:16:23] for a while. And Lisa, when you take a look at these property taxes, there's a little bit of a concern I had when I was taking a look at some recent information. Our new foreclosure activity is nowhere near alarming at this point. However, that also means that we have four consecutive months of year over year increases in south Florida. Now, we have no conditions that are set to repeat what we went through during the crisis previously. The majority of the mortgages that were at the epicenter of that are not even legal, let along available. We still have over 30% cash that is being put down on homes.

Brian Mudd:

When we were at crisis territory, we were down around 10% or a little under. And there are so many reasons. However, one of the things I am concerned about as we are seeing this slight trend of an increase, mortgage rates are increasing, people have variable rate mortgages. And of course, we do continue to see the increase in property tax assessments as well. Are we getting to the point in certain communities or maybe even those unfixed incomes to where this is a challenge and could be the difference whether they stay in their homes or not, some of these increases.

Lisa Treu:

And it's often not one thing, right? It's often a lot of things put together, so insurance increases, tax increases, flood insurance increases, which is a real issue.

Brian Mudd:

Flood has been huge, yes.

Lisa Treu:

Flood is a huge issue if you're in a mandatory flood zone. The other thing that we know is that many people really struggled after the hurricane last year. Many of them chose or asked for their mortgage to be delayed during those months because it's not even that their homes were damaged. People that lost income due to not being able to go to work, they didn't have the reserve, so they had to miss their mortgage payment. They asked for it to be extended and waved, and some of them said "yes" on the initial and then came and said, "Oh, well no. You have to make your mortgage payment next month." Then they got behind. We had someone call us that had gotten behind just because of the hurricane. And they said, "It's okay, I'll ask a friend of mine for a loan." They had no idea how quickly by not making a mortgage payment, when you start adding legal fees on there, that number gets big very quickly. I think it's just being informed and looking ahead, investors that all of a sudden their taxes have gone up and they're really struggling to make the numbers work.

Lisa Treu:

Don't wait until you get into that situation, be proactive and say, "Okay. My taxes are going to go up, it's clear. Now what do I do?" The biggest person that has the challenge is that new buyer who their taxes are based upon the previous owner. Then their escrow account is based on the previous owner's tax year. The new tax bill comes out, and guess what? Now, they have to make up last year plus their escrow account went up for next year. They're getting hit twice. It's part of planning. This information isn't a surprise that your taxes are going to go up in those cases. It's going to. If that person had a homestead, they had that differential that we just discussed, it's going to go up. I always tell our buyers, "Go ahead and just act like you're paying that amount, put it in a bank account, so when it comes due, you're not getting that big surprise and hit twice as heavy." That's usually what happens to people. I think it's just being informed and having to plan a strategy so that you can not be shocked and then find yourself in a financial situation.

Brian Mudd:

That makes perfect sense. And Dorothy, we have talked about these proposed property tax assessments. They're called "proposed" for a reason. They are not in stone at this moment. If you can walk us through the timeline and the process for someone who goes, "You know what? I've done my due diligence, and I'm still not sure this is right."

Dorothy Jacks:

Yeah. If I could just follow up on what Lisa said about people knowing what's coming with their taxes because it's absolutely true. All those benefits, homestead and portability, go away when the person who was receiving them sells. It's sort of like the sad honeymoon. You get the benefit for the remainder of the year, again, all taxes based on January 1st, so exemptions are also based on January 1st. If the seller was in that home on January 1st, didn't sell til July, then that seller's benefits are actually going to stay on that house the entire rest of that year. And buyer is going to get the honeymoon for the six months where they're going to have the seller's benefits. However, end of the year comes, all bets are off. Seller's benefits go away with the seller and buyer is sort of fresh.

Dorothy Jacks:

It's as if they've come right into the market at market value on that property, and they're going to pay tax on that market value. Now, this buyer may come in  and homestead, which is fantastic. That's what we want them to do as soon as they buy. However, they don't get the cap benefits of the prior owner. They start again from scratch. Market value minus exemption equals tax. We really encourage people to use our website.

Brian Mudd:

Which is outstanding, by the way. It really is well done.

Dorothy Jacks:

Good. Yeah, PBCGOV.com/papa.

Brian Mudd:

Super easy. I mean, if you only know your name, you can find your property in five seconds.

Dorothy Jacks:

Exactly, and just Google Palm Beach County property appraiser, and you'll find us. And in there, there's a tax estimator on the property level. And it will tell you. It allows you to put in what you're going to but the property for, and it'll tell you what the taxes could be. You have, as Lisa said, that number in your head. You can put the money aside in savings so that you could help yourself later on down the road when the taxes do hit. You can also call us. We can tell you about what the taxes will be. Anybody you speak to can tell you that in our office. And we're happy to do it because it's the scariest thing. And I can't tell you how many people call us, and we feel so awful, crying because they thought their taxes were going to be 2,000, and then their taxes are 6,000. And it's a shock. We want to try and help as much as we can. But about the proposed tax notice, this is an important time. There are 25 days from the day we mail the notices for you to file a petition protesting the value of your property. Now, it ends September 14th this year. That's the end. It's important. It's a fast, approaching window. But what you want to do is if you disagree with the market value, call us. Call our office. The phone number's on the form. And just talk to an appraiser about your value. And sometimes you tell us something we didn't know. I mean, we're valuing 635,000 properties a year. There are little detailed we may not know.

Brian Mudd:

Come on, you're not perfect? Your explanations are pretty sound. Surely, every assessment is perfect.

Dorothy Jacks:

We have no drones in the sky. But often people call us and tell us something we were unaware of, and then we're able to adjust their value. However, if we can't come to a happy conclusion, we always say, "File a petition." And that's a very simple process. $15.00 filing fee filed with the clerk of the court. It's not with us. We are not in charge of the process. The value adjustment board is in charge, separate entity. We end up being simply one side, basically an arbitration between the taxpayer and our office. And that hearing occurs later on, and you come in, provide market data that you've collected at a magistrate completely unrelated to us listens to you, listens to us, and then makes a determination. Palm Beach Property Taxes Made Easy Palm Beach ... (Completed 09/05/18) Transcript by Rev.com Page 9 of 10

Dorothy Jacks:

And that determination is binding on our office. We can't just say later on, "Oh, we didn't like that." And go back to where we were. It's binding on us. It's a good process if you really feel that our market value isn't appropriate. And I will mention that again that it's market value you have to petition, not capped value because of course cap is completely run by those caps, and it's not a determination of value.

Brian Mudd:

And what's the date, the deadline this year?

Dorothy Jacks:

September 14th is the deadline. And again, value adjustment board is the name of the body that you're petitioning to. You can Google that, too, Palm Beach County VAB. And you can look up the information. Again, $15.00 filing fee. It's pretty reasonably priced to do. Give us a call and let us help you out through that process too.

Lisa Treu:

I would also say look at the information. Right? Because one of the things that we find, and we usually find it when we're selling a property, is that a house way back when has the wrong square footage, has the wrong number of bedrooms, has the wrong data. That was done a long time ago, right? Somebody maybe fingered it and put in the wrong information when it was put in. Look at your own home. If you have an appraisal when you bought it, take the information, and compare it, and call their office. We have had many wonderful, helpful conversations with their appraisers about either maybe a change or a value.

Lisa Treu:

And they've always been great with providing data but also listening. I would say as a home owner, be responsible and check that information because maybe the taxes would go down, not because the value's wrong, but because the information on your home is wrong. But if you never look at it, and you call me, and 10 years later I find it, you're not going to go back retroactive and get all that money back. Right? Be a responsible person, and just take a look at that information. If you need help with it, call our office. We're happy to tell you where to get that information and to compare. It's helpful.

Brian Mudd:

That's good information. Thank you so much for taking the time with us today. And as always, the Treus, they are ready to help you. Seven days a week, feel free to call them, 561-972-8326. That's 561-972-8326. And again, if you're not already there, go check out TreuRealEstate911.com. The Treu's website is as good as it gets for local real estate. I am Brian Mudd for Lisa Treu and Palm Beach County's property appraiser, Dorothy Jacks.