Get Ready for Increased Property Taxes if You Inherit Property

For many who own real property like a house, that property is the most valuable asset that the person has to leave to family and beneficiaries. The inheritance of property, such as a home, in probate, can, for some individuals, be a great benefit, if not a windfall.

But people who inherit property, often overlook the issue of property taxes. Putting it bluntly, the taxing authority–the county or the city or both–don’t care that you inherited the property–they will continue to assess property taxes, which must be paid in a timely manner.

The Homestead Cap

In Florida, there is a limit to the yearly amount that property taxes can increase, when property is homesteaded. That means that someone living in homestead property for many years, might be paying far less than the current property tax rate, because of the caps on the tax increases.

But once the person homesteading dies, the property is no longer considered homesteaded. That means that the cap on the property tax increase disappears, and the property  taxes, will raise to whatever the current property tax rate is.

Beneficiaries Who Inherit Get a Tax Bill

Beneficiaries inheriting a home in probate, often aren’t actually living in that property. As such, the property taxes for the beneficiary inheriting the property can be significantly more than they were for the deceased who was living in the home, because once property goes through probate, it no longer is homesteaded.

Beneficiaries might opt to move into the inherited home, and thus, want the benefit of the prior owners lower, homestead-capped or lowered rate. Unfortunately, this isn’t possible; the lower, homesteaded, capped tax rate will die with the previous owner, and then automatically jump to whatever the current tax rate is, and will have to be “re-homesteaded,” by the new owner beneficiaries (assuming again, that they will be living in the inherited property) which will, of course, lead to much higher taxes.

This can be a shock to people inheriting property, who might feel that property taxes on this inherited home, would be the same as those on their own, homesteaded home–but they’re not. And there is no “exception” to property taxes, for people inheriting property in probate.

Paying Taxes Through Probate

During the estate process, if and when taxes become due, the personal representative will have to pay the property taxes, to preserve the property while the estate is being probated.

If the estate has no money to pay the property taxes, and no beneficiary can pay it, then the personal representative will have to ask the probate court to sell the property–often at a significant loss (or below market value), in order to avoid foreclosure of the tax liens. The taxing authority doesn’t have to wait until the resolution of your probate case to collect their taxes.

Beneficiaries who stand to gain from the home in probate, may protest–they don’t want their valuable inheritance being “fire sold” at a fraction of its value. But often, if the estate can’t pay the property taxes, that’s the only way to avoid losing the home entirely, to foreclosure.

Call the West Palm Beach probate law attorneys at The Law Offices of Larry E. Bray today for help handling your property in any probate case.

Source:

nclc.org/resources/heirs-should-not-be-subject-to-floridas-homestead-tax-exemption-penalty/