Like most states, Florida has rules and regulations that both buyers and sellers need to know before a home changes hands. Here is a quick sum-up, as well as what you can expect to pay in property-related taxes.
Home seller and buyer laws
Florida law requires sellers to disclose any facts that might affect the value of the property and aren’t readily obvious to the buyer. To do this, sellers often use a seller’s property disclosure form. It asks for various details, such as:
- The home’s legal history (e.g., legal claims, orders, court proceedings or complaints)
- Any major structural problems or issues with the roof, appliances and internal systems, such as those for water, plumbing, sewage and electricity
- Whether the home is in a flood zone or has a history of sinkholes
- Damage or infestations from carpenter ants and/or termites
- Environmental hazards, such as lead, mold or asbestos
- Whether a home is subject to the rules of a homeowners or condominium association
Florida is a judicial foreclosure state. This means a lender that wants to foreclose on your home will have to file a lawsuit and then work with a court, rather than working with a borrower outside of a courtroom. Buyers should also know that Florida gives lenders the right to a deficiency judgement. In other words, a lender has the right to sue you to recoup any debt if your foreclosed home sells for less than the balance of the mortgage.
Like most states, Florida is an equitable distribution state. This means in the event of a divorce a court is required to distribute assets, such as real estate, as fairly as possible, taking into account factors like the income and assets each spouse brought to the marriage. This is different from community property states, where courts require all assets and debts to be split evenly. In Florida, the law also treats any real estate that a couple lived in together as marital property, even if one spouse paid for the property before the marriage.
In Florida, state law doesn’t require you to have an attorney supervise your real estate closing, and a title company will often conduct the closing instead. Still, if you’re concerned about potential legal issues, it might be best to work with an attorney to fully represent your interests.
Florida requires the payment of transfer taxes — also known as documentary stamp taxes — any time a deed for a property transfers from one party to another.
For most of Florida, the current transfer tax rate is 70 cents for every $100 of the property’s sale price (or portion thereof). In Miami-Dade County, the initial tax rate is 60 cents for every $100 (or portion thereof), plus an additional city surcharge of 45 cents, for a total tax rate of $1.05 per $100. The surcharge, however, doesn’t apply to a single-family dwelling, including townhomes and condos. So, single-family homebuyers in Miami-Dade County pay just the 60 cent per $100 tax rate, as long as they aren’t purchasing multiple single-family dwellings.
According to Tax-Rates.org, the median property tax in Florida is now $1,773 a year, which means it ranks 23rd out of the 50 states based on the average amount of property tax it collects. This, however, is based on a home worth $182,400, and in Florida, as in most states, property taxes can vary widely by county. In Miami-Dade County, for example, the average property tax is now $2,756 per year, while residents in Dixie County in northwestern Florida pay just $503 per year.
Homeowners can get a break on property taxes in Florida. Like many states, it offers a homestead exemption that might allow you to decrease the taxable value of your home by up to $50,000, as long as it’s your primary residence. This, in turn, would allow you to pay less property tax each year.
Florida offers certain residents a variety of other property tax benefits besides the homestead exemption; those benefits are described here. To qualify, you’ll most likely need to be one of the following:
- Over 65
- A veteran or active duty military service member
- Permanently disabled or legally blind
- A disabled first responder or surviving spouse
Conforming loan limits
The conforming loan limit is $484,350 in every Florida county except Monroe County, home to the Florida Keys. There, the conforming loan limit is $529,000, a reflection of generally higher home prices in the island area.
Conforming loans are mortgages that meet federal guidelines set for Fannie Mae and Freddie Mac, two government-sponsored entities that buy and insure conforming loans to help make the mortgage market more affordable and predictable. As a borrower, you’ll probably get the best interest rate with a conforming loan over a jumbo loan, especially if you have strong credit.