Before we answer the question of who pays property taxes at a closing in Florida, we will first summarize how property taxes are as assessed against real property in Florida.
As a starting point, Florida real estate taxes are generally paid in arrears, which means the tax bill is not technically due until after the period the taxes are levied against the property. By way of example, the 2023 Florida property tax bill will not be due until March 2024 – although the tax bill covers the prior calendar year of 2023. However, it should be noted there are small portions of the property tax bill that are paid in advance – although a much smaller figure than the majority portion paid in arrears.
As further background, in or around August of each calendar year the local property appraiser’s and tax collector’s office will send out to each property owner what is called a Truth in Millage (TRIM) notice that summarizes the new assessed value for the property and the expected tax rate to be charged. There is a short period of time in which to challenge the new assessed value stated in the TRIM notice, but that challenge is not the subject of this article. Following the TRIM notice, sometime in or around November of each calendar year, the local property appraiser’s and tax collector’s office will send out the actual property tax bill due. As noted above, the actual property tax bill is due in the March following the calendar year the tax bill comes out.
With respect to how property taxes are handled and paid at the closing in Florida, effectively, the property taxes are paid by the seller through the date of the closing in Florida. Since the closing date does not line up with the exact date a property tax bill is due, the property taxes are pro-rated between the buyer and seller based on the date of the closing. This means that the seller will be charged a pro-rated amount of the property taxes due up to the date that is one day prior to the closing and the buyer will be charged a pro-rated amount for the property taxes as of the closing date and thereafter. If the closing date occurs on a date following the November when the actual property tax bill comes out and the end of the applicable calendar year, the pro-ration is very simple because there is an actual property tax bill for the specific period being pro-rated. The pro-ration of the property taxes between the buyer and seller becomes a little less precise when the closing date falls between January and the date the actual property tax bill comes out since this period will be based upon a property tax bill that has not yet been generated or determined.
As a result, the pro-ration for the period between January and the date the actual property tax bill comes out is typically based upon the prior year’s property tax billing and a small adjustment for potential increases from year to year. If the property being sold is subject to a homestead tax exemption, then there is a bit more certainty on the future property tax bills since they will be capped pursuant to the homestead tax exemption benefit (see Florida’s Homestead Tax Benefits).
Ultimately, most standard form real estate contracts in Florida include a provision allowing for the parties to re-prorate property taxes (between themselves) once the actual property tax bill comes out for the property.