The safest starting point is simple: do not assume the seller's current tax bill will become the buyer's future tax expense. Reassessment, exemptions, millage, and non-ad valorem charges can materially change the number after closing.
01 / Reset the baseline
The seller's tax bill describes the seller's assessment.
A current bill may reflect an older assessed value, exemptions, ownership history, or limitations that do not carry forward to an investor. Miami-Dade's Property Appraiser warns that current or prior taxes may not accurately forecast future taxes and that removal of a prior owner's Save Our Homes limitation after a sale can produce a significant increase.
02 / New ownership
Model the value used after a qualifying change of ownership.
Florida law generally provides for property to be assessed at just value after qualifying ownership changes, subject to statutory details and exceptions. Use a reasonable estimate of market value at the relevant assessment date—not automatically the old assessed value—and have a qualified adviser review unusual transfers, entity changes, exemptions, or ownership structures.
03 / Build the total
Separate ad valorem taxes from non-ad valorem assessments.
Ad valorem taxes depend on taxable value and the rates imposed by applicable taxing authorities. The total bill may also contain non-ad valorem assessments for services or improvements. Review the parcel's actual bill and official estimator disclosures so the model does not omit recurring charges.
04 / Use primary sources
Run the county estimator with acquisition-specific inputs.
Use the official property record and estimator for the exact parcel. Miami-Dade explains that its result is an approximation and may omit certain assessments. Broward's general estimator uses an average millage rate and directs users to the property-record estimator for a parcel-specific calculation. Preserve inputs, output, date, and assumptions in the diligence file.
05 / Calendar
Distinguish closing prorations from the stabilized annual expense.
The settlement statement may prorate taxes using the current bill, while the later reassessed amount can differ. Model both cash timing and stabilized expense. Ask the closing, tax, and legal professionals how prorations, escrows, notices, and subsequent bills apply to the specific transaction.
06 / Decision
Stress-test taxes before relying on projected returns.
Run the official estimate, then test a higher assessed value, changed millage, omitted assessments, and timing differences. Recalculate cash flow, debt coverage, reserves, and cash-on-cash return. If the investment works only with the seller's old bill, the underwriting is not ready.
Tax underwriting file
- Current parcel record and tax bill
- Purchase price and market-value assumption
- Expected exemptions or lack of exemptions
- Applicable taxing authorities and millage assumptions
- Non-ad valorem assessments
- Official estimator output and downside case