While West Palm Beach is gaining recognition as a very important South Florida city and closing lawyers and agents are orchestrating property sales at incredible prices, there can be downside to the boom for long term West Palm Beach homeowners: rising property taxes.
According to Zillow, the average home value in West Palm Beach is $404,886, an increase of 13.8% over the previous year. Increased demand and a limited supply are to blame for the increase in appraised value of West Palm Beach properties. Low mortgage rates coupled with the beautiful year-round weather and the lack of a state income tax continue keep new residents coming. Not only is Florida a desirable destination for residential homebuyers, commercial properties including hotels, apartment complexes, and warehouses all saw value increases, and therefore increases in tax money due this year. Palm Beach County’s taxable property values have increased 13.55% between 2021 and 2022.
Assessments and Appraisals: What’s the Connection?
You have probably seen the words assessment and appraisal used regarding West Palm Beach property values, but what’s the difference? Appraisals are used to estimate a property’s worth and is based on the current selling prices of homes in that area (comps), among a few other factors. Assessments are relative estimates of value that show how the government would tax the same property in the future. The assessed value of a property is not the same as its market value and is usually 70%-80% less depending on the area.
Property taxes are an important source of revenue for local governments, providing needed funds for public works, police and fire departments, schools, and other services. But what happens when a property is appraised too high or too low? And what can be done about it?
An appraisal that’s higher or lower than the asking price can affect a sale. Property appraisals that are higher or lower than the selling price can affect your refinance efforts or create issues when you go to sell the property.
This is why you need to be extra vigilant with your property assessment. An inaccurate property assessment could cost you thousands more per year in property taxes. But if the assessment was done in error there is legal recourse.
Disputing an Inaccurate Appraisal
Property owners who wish to dispute an assessment have two options. They can contact the Property Appraiser’s office to request an informal review, or file a petition for adjustment with the Value Adjustment Board (VAB). They can also do both.
The VAB is made up of five people from the county board of commissioners, school board, and private citizens. They make use of special magistrates who conduct hearings to review matters regarding property valuation, portability denials, change of ownership, and other property related matters.
Before You File a Petition
The Palm Beach County Tax Appraiser’s office recommends that property owners request an informal review with them before going to the VAB. If the matter doesn’t get resolved, you can then file a petition with the VAB.
You have until the 25th day following the mailing of your TRIM notice to file a petition. This year’s VAB petition deadline is September 12, 2023. The TRIM notice is a document from the Tax Appraiser’s office detailing the current market value of your property as of January 1st of that year.
What Should Your Market Value Be?
On the first TRIM notice you receive after purchasing your home, you want your market value to be as low as possible. If you homestead your property, as most residents do, in subsequent years, you want your market value to be as high as possible.
The reason for this is portability, which allows homeowners to transfer some or all of their homestead exemption on a previous property to a new property. Portability is the difference between the property’s market value and the assessed value.
If you plan on living in your home forever, then portability isn’t a concern. But if you think you might move and purchase a different home in Florida, then portability is more important, as it keeps you from paying higher property taxes when you sell your old Florida home and purchase a new one. To make sure you have as much portability as you can get, you want your market value to be low that first year after your home purchase, and then as high as possible after that.
Ideally, your market value for the first year should be about 85% of the purchase price of the home. In subsequent years it should move up, and should be somewhere around 85% of what you think your home would sell for. If not, you can take action to request a review or file a petition to get it rectified. This site contains step-by-step instructions for properly checking your TRIM notice and what to do if you feel it is in error.
Property taxes are an unavoidable part of property ownership, but with a little due diligence you can make sure your property tax liability is as low as possible.
For questions regarding your next property purchase or sale, contact Florida Bar Board-Certified Attorneys David E. Klein, Esq. and Guy Rabideau at Rabideauklein.com. They have the expertise and experience you need to ensure that your interests are protected throughout your real estate transactions in The Palm Beach Beaches and throughout Florida. Contact Rabideau Klein today to discuss the legal implications of your Florida property transactions.