You will have to pay annual property tax on your vacation home. The annual fee is a calculation based on a mill rate times the appraised value of your property as appraised by the county appraiser.
It’s important to note that the appraised value is not the actual value of your property in the real estate market. The county appraiser’s valuation is usually about 80% of market value but this number can vary depending on circumstances. The annual tax notification is in November of every year and is payable in arrears. There is no additional property tax fee to a foreign national owner as opposed to a USA resident.
CDD (Community Development District)
A CDD fee is a fee imposed by the developer of a neighborhood or subdivision to finance the cost of amenities in a neighborhood. These amenities and community improvements would not be provided without funding from CDD fees. Rather than increase the home’s selling price to cover the common amenities, the developer borrows money from the county, so the CDD fee that is paid by the homeowner is basically a repayment of a loan the developer received from the county.
CDD fees vary by development and are based on the amount of the loan taken from the county divided by the number of homes responsible for paying back the loan. CDD fees are paid with your annual property tax and are paid in advance as opposed to arrears with property tax.
Property Tax and Your Closing Documents
The settlement statement can be a confusing document but it is quite simple to follow once you know what to look for.
First thing to understand is that a settlement statement is generally divided into two sections. Page one is the complete settlement statement. Page two is a breakdown of the individual charges.
Page 1 is divided into two half’s, the left side is the buyers credits and debits and the right side the sellers credits and debits.
You will see several instances where the numbers are the same on both the sellers side and the buyers side. These equate to an amount that is transferred between the parties. Usually a pro-rated amount that one side owes the other for future or past payments.
An example of this would be HOA fees the seller has paid up until the end of the year. Those monies would be reimbursed to the seller by the buyer on the settlement statement. Going in the opposite direction would be property tax as it is paid in arrears and the seller would be due their portion to the buyer for the time they owned the property up until the closing date.
Property Tax
Property Tax is paid in arrears, so come Dec 1st you will have to pay the entire tax bill for the property you just purchased.
On line 511 you will see a dollar amount which is the amount of tax due to the seller for the year up to the closing date – it has been debited from his proceeds.
On line 211 you will see a dollar amount which is the debited amount credited to you to cover his portion of the taxes. So you are ahead that dollar amount – until Dec when you will have to pay the whole tax bill for the property.
The title company ensures that there is no outstanding tax arrears on the property. Additionally the title insurance (line 1108) will cover any errors by the title company so even if they make a mistake you are insured against any errors by the title company and this insurance would cover any such missed charges including title liens and tax.
