Appraising Your Property Prepared by: Abe Skinner, CFA www.collierappraiser.com What is Market Value? Finding the market value of your property is a matter of discovering the price most people would pay for your property in its current condition. That is the Property Appraiser’s job. He is an appraiser of property. It is not quite that simple, however, because he has to decide what the value would be for every piece of property in the county, no matter how big or small, as of the appraisal date of January 1 each year.
In fact, he has to arrive at the value of approximately 250,000 individual parcels of land and the buildings on them, including thousands of acres of citrus, pasture, and farm land. He must also find the value of thousands of tangible personal property accounts.
In addition to valuing property, the Property Appraiser must administer more than 80,000 homestead exemptions, widow’s, widower’s, and disability exemptions. He must also determine the eligibility of property entitled to capped assessments and agricultural classifications, as well as the eligibility of certain religious, charitable, educational and municipal properties for tax exemption.
How the Property Appraiser goes about his job To find the value of your piece of property, the Property Appraiser must first establish what price properties similar to yours are selling for, what the cost would be to replace it, how much it takes to operate and keep it in repair, and what income, if any, it may earn. Using these facts, he will then go about finding your property’s value using any of the following three ways: Direct Sales Comparison, Replacement Cost, or Capitalization of Income.
Direct Sales Comparison The first way to calculate value involves finding properties similar to yours that have recently sold. The Property Appraiser must analyze the selling prices very carefully to get the true picture. For example, one property may have sold for more than market value because the buyer was in a hurry to occupy the property and paid more than it was worth. Another property may have sold for less than market value because the owner needed cash right away and was willing to sell to the first buyer who made an offer.
When using the direct sales comparison approach - comparing the selling prices of property similar to yours - the Property Appraiser must always consider such over or under pricing to arrive at a fair evaluation of your property’s value.
Replacement Cost The second way to figure value is based on how much money it would take, at current material and labor costs, to replace your property with one similar. If your property is not new, the Property Appraiser must also determine how much it has depreciated.
Capitalization of Income The third way to determine value is used in addition to the other two ways. The income approach is used if the property you own provides, or could provide, you with an income, such as an apartment building, store, or factory. Here, the Property Appraiser must consider such facts as your operating expenses, taxes, insurance, maintenance costs, degree of financial risk you take in earning income, and the return most people would expect to get from this kind of property.
Why appraised value changes from year to year, as of January 1 When market value changes, naturally, so does appraised value. For instance, if you were to increase the total market value of your property by building a swimming pool in your backyard, the appraised value would increase proportionately.
Similarly, should your property’s value decrease because of a fire, the appraised value would decrease to show the downward effect of this damage on the market value of your property.
The economy of the entire community affects your appraised value. Each year your Property Appraiser reappraises the entire county to reflect proper market value. If the economy is strong, thereby increasing the value of property on the market, it will be reflected in increased property values. Conversely, if the economy is weak, creating a soft or lower real estate market, lower values will be reflected.
The Property Appraiser has not created this value, he simply has the legal responsibility to discover it as it exists and to appraise the property accordingly. People create the value through their transactions in the marketplace.
Appraised value and the tax rate The Property Appraiser is separate from the Tax Collector, and the Property Appraiser does not determine the total amount of taxes collected. However, as a property owner, you are not only interested in what value he places on your property, but in how the amount of taxes you pay is determined. This is how it works:
Let’s say the Property Appraiser has found the value of your home to be $250,000. You apply for and receive the Homestead Exemption, so that you have a school taxable value of $225,000 and a taxable value of $200,000 on all other taxing authorities.
Now, let’s assume that the taxing agencies (city, county commissioners, school board, special districts, etc.) have set the tax rate in your community at 11.8229 mills. That means $11.8229 of taxes per $1,000 of taxable value.
Divide the taxable value of your property by $1,000 and then multiply by the non-school millage to arrive at the non-school taxes. Then divide the school taxable value by $1,000 and multiply by the school millage to get the school taxes. Add the non-school taxes to the school taxes to arrive at your total property taxes. SAMPLE School Taxable Value ÷ $1,000 x School Millage = School Taxes ($225,000 ÷ $1,000 x 5.699 = $1,282.28) Taxable Value ÷ $1,000 x Non-School Millage = Non-School Taxes ($200,000 ÷ $1,000 x 6.1239 = $1224.78) Non-School Taxes + School Taxes = Total Property Taxes ($1282.28 + $1224.78 = $2507.06) This is the amount of taxes due on your home (less the discount for prompt payment - if paid in: November, 4%; December, 3%; January, 2%; February, 1%.)
Differing with the Property Appraiser’s market value appraisal If your opinion of the value of your property differs from the Property Appraiser’s, please come in and discuss the matter with us. If you have evidence that our appraised value is more than the actual fair market value of your property, we will welcome the opportunity to review all the pertinent facts with you.
After talking with us, if you still find a significant difference between our appraisal and what you feel your property’s market value is, you may request a hearing before the Value Adjustment Board (VAB). You must file a written application with the Clerk of the Circuit Court (acting as Clerk of the Value Adjustment Board.) Applications may be obtained from the Property Appraiser’s office.
The Value Adjustment Board’s function is to appoint a special magistrate to hear evidence and make recommendations to the VAB whether or not properties requesting a hearing are appraised at more or less than their market value. The Board has the authority to change the appraised value if they find this is the case. They cannot change your appraised value for any reason other than differences in market value. The Board can also hear appeals on denial of exemptions.
…But see us first The Property Appraiser and his staff are at the service of the public and will be glad to assist in all matters concerning county appraisals and exemptions. The Property Appraiser’s office is your office. Feel free to visit and examine our public records anytime. What is Homestead Exemption? Every person who has the legal or equitable title to real estate and maintains it as a permanent residence, or as the residence of a legal or natural dependant of the owner, will be entitled to a $25,000 exemption each year on the school taxing authority and a $50,000 exemption on all other taxing authorities. Regular filing begins on January 1 and ends on March 1 each year. However, our office accepts pre-filed applications throughout the year so that you might avoid long lines at the regular filing time for Homestead Exemption. In addition, the year following the first year you receive Homestead Exemption in your name, the property will receive a cap on assessment increases.
This cap on homesteaded properties limits the amount of increase in assessed value to the lesser of 3% or the Consumer Price Index (CPI.) Therefore, if your property is capped, even if the demand for your property causes the market value to increase 10%, your prior year’s assessed value will only increase the lesser of 3% or the CPI.
How do you qualify for Homestead Exemption? In order to apply, you will need to bring the following information: • A recorded deed or tax bill in your name • Florida drivers license • Florida auto tag registration • Collier County voter registration card, if you are a registered voter • Social Security numbers for applicant and spouse • Declaration of Domicile filed with the Clerk of the Circuit Court, if you have recorded one • Documentation from your assessor/appraiser that any residency based exemptions on your out of state property have been removed • If the property is held in a trust, a copy of the trust is required for review and qualification • An applicant who is not a U.S. citizen must present a resident alien card (green card) when they apply
All documentation must be dated prior to January 1st of the tax year for which you are applying for exemption. If you do not possess these items, please call us for further information. If property is jointly owned, all owners who reside on property should make application.
You must have legal or equitable title to the property and reside there as a legal resident of Florida, on or before January 1. There is no time limit for Florida residency; not one year, nor 6 months and one day.
Senior Exemption In order to qualify for an additional homestead exemption of up to $50,000 for persons age 65 years or older, the “household income” (cumulative “adjusted gross income”) of all persons living in the home cannot exceed the yearly amount as determined by the Florida Department of Revenue. This exemption applies only to the property taxes levied by the taxing authority granting the exemption and you must re-apply each year.
$500 Widow’s or Widower’s Exemption To file for Widow’s or Widower’s exemption you must be a widow or widower prior to January 1 of the tax year and bring proof of your spouse’s death. Divorced persons do not qualify for widow’s or widower’s exemption. $500 Civilian or $5,000 ex-service member Disability Exemption To apply for disability exemption, you must present one of the following documents: • Proof of total and permanent disability from a licensed Florida physician or the Veterans Administration. • V.A. proof of 10% or more service-connected disability. • Proof of legal blindness.
Total Exemption of Homestead from Taxation For more information on total exemption from taxation due to permanently disabled persons please refer to our Homestead Exemption Brochure. Non-Homestead Property 10% Cap Starting in 2009, non-homesteaded property is eligible for a 10% limit on annual assessment increases. No application is required. When and where do I file? New applications for homestead, Senior exemptions, widow’s, widower’s or disability exemptions for the current year must be made in person prior to March 1. These applications may be made at the Property Appraiser’s office or in various local communities at a time and place designated by the Property Appraiser. The schedule indicating the times and places for filing for exemptions is published each year in your local newspaper, or you may call the Property Appraiser’s office and be advised of this schedule.
Property owners who are not eligible for the current year, but will be eligible for the following year, may pre-file for the exemption any time after March 1.
Penalty Any person who applies for tax exemption knowing that they are not entitled to the exemption will be guilty of a misdemeanor. Upon conviction, you can be subject to one year in prison and/or a $5,000 fine.
Mobile Homes If you hold title to a mobile home and the land on which it is situated, and the mobile home is permanently affixed to the land, you may apply to the Property Appraiser to have the property appraised as real property. This application requires you to purchase a Real Property sticker for each mobile home. Homestead Exemption may be allowed if the mobile home meets the qualifications of being permanently affixed. In the event your mobile home does not qualify for a Real Property sticker, the law requires that you purchase a Mobile Home sticker. What other property is entitled to tax exemption? To be wholly or partially exempt from ad valorem taxation, property must be used exclusively or predominantly for charitable, religious, educational, governmental, literary, or scientific purposes. 1. All property used exclusively for exempt purposes will be totally exempt from ad valorem taxation. 2. All property used predominantly for exempt purposes will be exempt from ad valorem taxation at the percentage that such predominant use bears to the nonexempt use. 3. No application for exemption may be granted for religious, literary, scientific or charitable use of property until the Property Appraiser or the Value Adjustment Board has found the application to be nonprofit as defined in F.S. 196.196. 4. Educational institution means state, parochial, church and private schools, colleges and universities conducting regular classes and courses of study required for eligibility to certification by, accreditation to, or membership in the State Department of Education of Florida, Southern Association of Colleges and Secondary Schools, or the Florida Council of Independent Schools.
How may property qualify for Agricultural Classification? To qualify land for agricultural classification, you must file a return with the Property Appraiser between January 1 and March 1 of the tax year. Only lands used for bona fide agricultural purposes will be classified as agricultural. “Bona fide agricultural purposes” means good faith commercial agricultural use of land.
The Property Appraiser may deny agricultural classification to the following lands:
1. Lands that are not being used for, or are diverted from, agricultural use. 2. Land that has been zoned nonagricultural at the request of the owner. 3. Land on which a subdivision plat is recorded. 4. Land that is purchased for a price three or more times the agricultural appraisal placed on the land. In addition, the Board of County Commissioners may reclassify land to nonagricultural when there is contiguous urban or metropolitan development, and the continued use of such land for agricultural purposes will act as a deterrent to the timely and orderly expansion of the community. What is Tangible Personal Property? Tangible personal property is all goods, chattels and other articles of value used for commercial purposes. It includes machinery, equipment, furniture, fixtures, signs, window air conditioners, supplies, mobile home attachments on rented land (cabana, carport, screened porch, etc.) furniture and appliances in rental units, and leased, loaned, borrowed or rented equipment used in a business.
Who is required to file? Every person, firm, corporation, etc., owning any tangible personal property in Collier County is required to file a return. When do I file? All tangible personal property returns must be filed with the Property Appraiser between January 1 and April 1 each and every year to avoid penalties.
Penalties Penalties may be imposed for failing to file, or improper or late filing of a Tangible Personal Property Return. 1. Failure to file - 25% penalty. 2. Filing after the due date - 5% penalty per month. 3. Unreported Property - 15% tax attributed to omitted property. Failure to file a return, or to improperly submit the property for taxation, does not relieve the taxpayer of any requirement to pay all taxes assessed against the property.
Need more information? For more information on Tangible Personal Property, please refer to our brochure or call us at 239-252-8145. Collier County Property Appraiser www.collierappraiser.com 4715 Golden Gate Pkwy • Naples, Florida 34116 Tel: (239) 348-0246 • Fax: (239) 348-3590 3950 Radio Road • Naples, Florida 34104 Tel: (239) 252‑8141 • Fax: (239) 252-2071 Collier County Property Appraiser 2335 Orange Blossom Drive • Naples, Florida 34109 Tel: (239) 252-4444 • Fax: (239) 252-5984
Market Moving Up or Down?
Cindy Carroll has a formula that she says can be used to determine if the market is weak or strong. It predicts the future by looking at the past. It is just one of the tools she uses as an appraiser in her family company, Carroll & Carroll.
Using figures from the Multiple Listing Service, she looks at the number of properties that are actively for sale and divides that by the number sold in the prior 12 months. The resulting number is the "years of supply." Put another way, it shows how long it would take to sell the active properties based on the number of properties that were sold in the past 12 months.
If the "years of supply" is small, then Ms. Carroll considers that a sign that prices might move up because the demand is beginning to balance or outstrip supply. If the "years of supply" is large, then that might indicate that supply outstrips demand and prices will be flat or decline.
Here are some examples of house and condo sales combined:
·Pelican Bay in equilibrium, with the number of properties for sale equal to the number closed in the past 12 months. This shows a stable market and can indicate that prices will start to move up.
·Crayton, which includes properties inland and on the beach, has fewer properties for sale than the number closed in the past 12 months. This shows that prices will move up because demand is likely to outpace supply.
·Olde Naples is lagging, with more properties for sale than sold in the past 12 months. The number of years of supply is 1.25. This indicates that prices will remain flat or decline somewhat.
·Port Royal/Aqualane has more properties for sale than closed in the past 12 months, with 1.47 years of supply. This shows that prices may remain flat or decline because supply is outpacing demand.
It is possible to be more precise by comparing, say, only houses or only condos.
This supply and demand figure is only one of many that indicate trends. There are lots of other important considerations in valuing properties including exposure, view, condition, age and location. For instance, the condition of the property can equal 10 percent to 20 percent of the value. If the property is sold with a club membership, or has a boat dock, the value is adjusted appropriately.
Uniform Appraisals Required WASHINGTON, Sept. 1, 2011 – It should be easier now for Fannie Mae and Freddie Mac to interpret appraisals for loans for the purchase of single family and condominiums. Under the new rules, appraisers must comply with a "Uniform Appraisal Dataset" or UAD. Appraisers will now have to 1) use UAD-compliant software, 2) standardize abbreviations and values for many form fields, and 3) standardize ratings and definitions for quality, condition, view and location.