Under Florida law, the status of a property on January 1 is the criteria for establishing value for the entire year. Each year's value stands alone and is based on market information including sales of comparable property from prior years. Value is a reflection of the market. When sale prices decline, so do values, and conversely when sale prices increase, so do values.
There are three values used in the ad valorem process.
- Just/Market Value
The first value established each year is the Just/Market Value, based on market information including sales. Two truly identical properties would have the same Just/Market value.
- Assessed Value
The second value, known as Assessed Value, is the value that has been capped by an assessment cap, such as the Save Our Homes Cap* or the 10% assessment cap on non-homestead parcels. The Save Our Homes Cap, which was voted into law effective January 1, 1995, limits annual increases in assessed value of property with homestead exemption to 3 percent, or the Consumer Price Index, whichever is lower. The non-homestead cap applies to all non-homesteaded property regardless of property type and limits increases in assessed value to a maximum of 10% annually. In the year following a transfer of ownership, Just/Market and Assessed Value will be equal due to a reset of the respective assessment cap.
*Because of the Save Our Homes Cap, it is not possible to compare taxes or assessed values with your neighbors. For example, if one of your neighbors has homestead exemption and has had the Cap for several years, then their assessed value- and thus, taxes - could be lower than yours, even if the market value of your neighbor's property is identical to or higher than yours.
- Taxable Value
Finally, any exemptions (such as homestead exemption) are subtracted from the assessed value to reach the third value, known as Taxable Value. The annual millage rate set by each respective taxing authority is multiplied by the taxable value to reach the annual gross tax amount.
Property taxes are determined by multiplying the property's taxable value by the millage rate set each year by the taxing authorities.
Just/Market Value limited by the Save Our Homes Cap or 10% Cap = Assessed Value
Assessed Value - Exemptions = Taxable Value
Taxable Value x Millage Rate ÷ 1,000 = Gross taxes