Investors and first time buyers are always concerned about property taxes and new construction homes. Of course, when the property is brand new the taxes will be extremely low because only the lot is being taxed, not the actual structure...makes sense because it wasn't built when the taxes were assessed.
So how can someone project the estimated property taxes? Easy. Whichever county you live, in my case Orange County, visit the Property Appraiser or Property Assessor site.
Rick Singh is our county appraiser.
In my immediate area, Randal Park is a new sub-division with many new homes, so I'm going to use one of those advertised on MLS as my example.
This property is being taxed minimally because the structure hasn't been assessed yet. You see the Values, Exemptions and Taxes tab on the left? To determine tax rates (Millage) you'll look here. This is also the tab where you can determine if the property belongs to a CDD community.
Look for the Millage number, and in this case it's 19.6012. Knowing this, you can now calculate the taxes for new construction.
Here's what you do:
- Listed price is $388,856
- Millage Rate is 19.6012
- Multiply 388,856 X 19.6012 = 7,622,044.23
- Now divide 7,622,044.23 by 1,000
- Your estimated taxes compute to $7,622.04
Don't assume a millage rate for one neighborhood is the same for another! Always check because it could be higher or lower.
If you plan to owner occupy the property, you'll receive a $50,000 exemption. Still using the same example and initial sales figure, we'd now use $338,856 (taking advantage of exemption) to calculate taxes. $338,856 X 19.6012 divided by 1,000 = $6,642.
Using the strict sales figures, in my opinion, is the most prudent way to estimate taxes, particularly with investors. Nobody likes financial surprises when they have an adverse affect.