After years of fast appreciation, housing markets eventually cool. Listings sit longer, prices flatten, and some neighborhoods see small declines. It is natural to expect property taxes to follow. For many Orange County homeowners, they don't. Here are the four reasons.
1. Recapture keeps capped assessments rising
Florida's Save Our Homes cap limits increases in a homestead's assessed value to 3% or the change in the Consumer Price Index each year, whichever is lower. During a boom, that cap opens a wide gap between market value and assessed value.
When the market cools, that gap does not disappear. Florida law requires the assessed value of a capped homestead to keep rising by the annual cap until it reaches market value. This is called recapture. A homeowner whose market value fell from $500,000 to $480,000, but whose assessed value is only $330,000, can still see the assessed value rise by the cap.
Recapture only stops when market value drops below the capped assessment. For owners who have held homestead for many years, the market would have to fall a long way for that to happen.
Non-homestead property works similarly with its 10% cap for non-school levies.
2. The January 1 snapshot lags the market
Values are set as of January 1, using sales from the prior year, and appear on TRIM notices in August. A slowdown that begins in spring won't show up in values until the following year. By the time a softer market reaches your notice, you may be looking at a different market again.
3. Taxable value is only half the bill
Your tax equals taxable value times millage. Even if your taxable value holds steady, a taxing authority can adopt a higher rate. And when values fall across a whole jurisdiction, rates can rise to maintain budgets. Florida's rolled-back rate is designed to make that visible: if an authority adopts a rate above the rolled-back rate, it is a tax increase under the law, even if the rate stays the same. Our post on what "no new taxes" really means explains how to read those numbers on your TRIM notice.
4. New fees and assessments
Non-ad valorem assessments, such as solid waste, stormwater and community development district charges, are flat fees that don't depend on value. A new or increased assessment raises your bill regardless of the market.
Who does see lower taxes in a cooling market?
- Recent buyers. A home bought near the market peak is often assessed near market value, with little or no Save Our Homes gap. If market value falls, assessed value can fall with it.
- Non-homestead owners whose values were near market. The same logic applies.
- Owners whose market value drops below the capped assessment.
What you can do
- Check your TRIM notice in August. Compare market value with recent sales from before January 1.
- Understand your gap. If your assessed value is far below market value, a value appeal probably won't lower your taxes, because recapture still applies.
- Appeal if your market value is too high and it matters. For recent buyers and non-homestead owners, a lower market value can mean a lower bill. See the TRIM notice and appeals guide.
- Attend budget hearings listed on your notice if you want to comment on rates.
The Save Our Homes guide covers recapture in depth, and the Orange County property appraiser guide homepage links to every topic on this site.