When buyers begin searching for a home, most start with a purchase price.

“I want to stay under $800,000.”

“I don't want my mortgage payment over $4,000.”

“I want at least an acre.”

“I'd rather live outside the city.”

Those are all reasonable starting points. But there is another number buyers should establish early in the process:

How much are you comfortable spending each year on property taxes?

That question can materially change where you should look, how much house you can comfortably own, and even whether Florida or Georgia makes more sense for you.

For buyers considering North Florida and Southwest Georgia, this becomes particularly important because crossing a county line—or sometimes simply crossing a city-limit line—can change the property-tax equation.

The Purchase Price Isn't the Whole Housing Cost

A mortgage payment is often described as PITI:

Principal + Interest + Taxes + Insurance

Principal and interest are determined primarily by the amount borrowed, loan term and interest rate.

Property taxes and insurance are different. They are ongoing costs of owning the property, whether the home has a mortgage or is owned free and clear.

That distinction matters.

A buyer paying cash for an $800,000 house may have no mortgage payment at all, but they still have property taxes, insurance, maintenance and potentially HOA or special-district assessments.

Likewise, paying off a mortgage does not eliminate property taxes.

Are Property Taxes “Rolled Into” the Mortgage?

Not exactly.

When a lender escrows property taxes, approximately one-twelfth of the anticipated annual tax bill is collected with each monthly mortgage payment. The mortgage servicer holds those funds in an escrow account and pays the tax bill when it becomes due.

For example:

$4,800 annual property tax = approximately $400 per month

$7,200 annual property tax = approximately $600 per month

$10,000 annual property tax = approximately $833 per month

That amount is added to principal, interest, homeowners insurance and, when applicable, mortgage insurance and other required housing expenses.

The tax hasn't become part of the mortgage loan. The lender is simply collecting the money monthly so the annual bill can be paid.

Some borrowers may be permitted to pay taxes and insurance themselves rather than escrow them. That changes when you pay the expense—not whether you owe it.

Why Property Taxes Affect Buying Power

Consider two buyers who can both afford the same principal-and-interest payment.

Buyer A purchases in an area where property taxes are $5,000 annually.

Buyer B purchases a comparable property where taxes are $10,000 annually.

Buyer B has roughly $417 more per month in property-tax expense.

That's $5,000 every year.

Over ten years, ignoring future tax changes, that's a $50,000 difference in carrying costs.

This is why property taxes should be considered when comparing communities—not just home prices.

A lower-priced house in a higher-tax jurisdiction isn't automatically less expensive to own. Likewise, a somewhat higher-priced property in a lower-tax jurisdiction may occasionally produce a surprisingly competitive total monthly housing expense.

Florida Property Taxes: Don't Use the Seller's Current Tax Bill

This is one of the biggest mistakes I see buyers make.

A buyer pulls up the county property appraiser's website and sees that the current owner paid $4,200 in taxes.

They assume their taxes will be about $4,200.

That may be very wrong.

Florida's Save Our Homes provisions can limit increases in the assessed value of a homesteaded property. Someone who has owned a Florida home for many years may therefore have an assessed value substantially below its current market value.

After a change in ownership, the property is generally reassessed so that assessed value reflects just value. A new owner who qualifies can then establish their own homestead exemption and begin building their own Save Our Homes benefit.

Florida homestead can reduce taxable value, and eligible homeowners moving from another Florida homestead may also be able to transfer—or “port”—some of their accumulated Save Our Homes assessment difference.

Those are valuable benefits.

But buyers should never assume that they will inherit the seller's tax bill.

An $800,000 House With a $5,000 Tax Budget

I recently encountered a situation that illustrates why this conversation needs to happen early.

A buyer wanted an approximately $800,000 home in North Florida, while also wanting annual property taxes to remain below approximately $5,000.

Those are two very different financial objectives.

A $5,000 annual tax ceiling equals about $417 per month.

If the properties that otherwise meet the buyer's needs produce estimated taxes of $8,000, $10,000 or more after purchase and reassessment, changing lenders or putting more money down doesn't solve the tax issue.

The choices become:

Lower the purchase price, choose a lower-tax jurisdiction, determine whether additional exemptions or portability apply, or reconsider the annual tax ceiling.

That isn't a financing problem.

It's a property-selection problem.

And identifying it early can save everyone weeks of looking at homes that ultimately don't fit the buyer's financial priorities.

Florida: City vs. County Can Matter

Florida property taxes generally involve several taxing authorities.

Depending on the property, those may include the county, municipality, school board, water-management district and various special taxing districts.

A property inside an incorporated municipality can therefore have a different total millage from a property located in an unincorporated portion of the same county.

And two unincorporated properties can sometimes differ because of MSTUs, fire districts or other taxing authorities.

That is why I created my Florida 67-County Property Tax Comparison.

Florida Property Tax Comparison Tool

[FLORIDA 67-COUNTY PROPERTY TAX COMPARISON / DOWNLOAD HERE]

This report is designed as a comparison and planning tool. It allows buyers to look broadly across Florida counties and understand how millage levels compare.

It should not be used as a substitute for a parcel-specific tax estimate.

Once we identify an actual property, we can examine the property's taxing authorities, estimated post-purchase assessed value, applicable exemptions and potential portability to develop a much more meaningful estimate.

Georgia Calculates Property Taxes Differently

Buyers crossing the Florida-Georgia line need to understand that Georgia's calculation starts differently.

In Georgia, most real property is assessed for ad valorem taxation at 40% of fair market value.

So a property with a $500,000 fair market value generally begins with:

$500,000 × 40% = $200,000 assessed value

Applicable exemptions are then considered and the relevant millage is applied.

Georgia also has county, school and—in incorporated areas—potential municipal taxation. Local homestead exemptions can vary considerably.

That makes comparing Georgia counties and municipalities especially important.

Georgia Property Tax Comparison Tool

[GEORGIA 159-COUNTY PROPERTY TAX COMPARISON / DOWNLOAD HERE]

My Georgia comparison includes all 159 counties and is intended to help buyers compare county and school millage and understand the difference between incorporated and unincorporated county taxation.

Again, this is a planning tool rather than a quote of future taxes on a particular property.

Individual cities may levy additional municipal taxes, and exemptions and special taxing districts can affect the final bill.

Should You Choose Where to Live Based on Property Taxes?

Taxes should be a factor, but I rarely recommend making them the only factor.

A community with higher property taxes may offer services, schools, infrastructure, utilities, parks, fire protection or other amenities that a buyer values.

A lower-tax rural location may provide acreage, privacy and lower carrying costs—but perhaps a longer commute or fewer municipal services.

There is no universally “better” answer.

The useful question is:

What am I receiving, what will it cost me annually, and does that combination fit the lifestyle and financial plan I want?

That is a much better real estate question than simply asking which county has the lowest millage.

Property Taxes Also Matter When You Sell

Buyers aren't the only people who should understand this.

Sellers should too.

If you have owned your Florida home for 15 or 20 years, your current tax bill may look wonderful compared with what a new buyer could experience after reassessment.

That can become particularly important when selling luxury homes.

A buyer considering a $1 million property isn't evaluating only the mortgage. They may be comparing:

• annual property taxes;

• homeowners and flood insurance;

• HOA or community assessments;

• maintenance;

• utilities;

• commuting costs; and

• the overall cost of living in one community versus another.

Those expenses influence affordability and sometimes influence the price a buyer is willing to pay.

The Better Way to Establish a Home-Buying Budget

Before beginning a serious home search, I like buyers to establish more than a maximum purchase price.

We should know:

1. Maximum comfortable purchase price

2. Maximum comfortable total monthly housing expense

3. Acceptable annual property-tax range

4. Expected homeowners and flood insurance

5. HOA/CDD/special assessments, if applicable

6. Whether the property will be homesteaded

7. Whether the buyer has Florida portability or qualifies for other exemptions

8. Whether city limits versus unincorporated county matters

Once we know those numbers, the search becomes considerably smarter.

Instead of finding the perfect house and then discovering that the carrying costs don't work, we can search for the right property in the right tax environment at the right total cost of ownership.

Florida or Georgia? Sometimes the Numbers Help Decide

Living and working across North Florida and Southwest Georgia gives me an interesting perspective on this.

A buyer considering Tallahassee may also be considering Havana, Monticello, Quincy or Crawfordville.

A buyer willing to cross the state line might also consider Thomasville, Cairo, Bainbridge, Quitman or other South Georgia communities.

Those markets aren't interchangeable. Neither are their property-tax systems.

Purchase price, acreage, insurance, taxes, commuting distance and lifestyle can all change substantially within an hour's drive.

That's why I created these Florida and Georgia property-tax comparison tools.

They're not designed to tell you where you should live.

They're designed to help you ask better questions before you buy.

Because the best home isn't simply the one you can purchase.

It's the one you're comfortable owning after closing, too.

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Debbie Kirkland, Broker
Century 21 First Story Real Estate
Specializing in luxury homes, land, farms and legacy properties throughout North Florida and Southwest Georgia
850-212-0440

This article and the accompanying spreadsheets are provided for general real estate planning and educational purposes. Property-tax assessments, exemptions, millage rates and special assessments vary by property and taxing jurisdiction and can change annually. Buyers should verify estimated taxes with the applicable county property appraiser/tax assessor, tax collector/commissioner and their lender or tax professional before making financial decisions.

Citations:

Florida Department of Revenue property-tax information
Georgia Department of Revenue property-tax valuation guide
CFPB guide to mortgage escrow accounts