How is Property Appraised?

Sales Comparison/Market Approach to Appraisal
Cost Approach to Appraisal
Income Approach to Appraisal
Mass Appraisal
Market Value and Assessed Value... What's the Difference?
Factors the Appraiser must Consider in Deriving Just Valuation
How Can Appraised Value Change From Year To Year?
The Florida Dept. of Revenue's role in the Property Appraiser's Work?
What are Special Assessments... Why are they on Tax Bills?
Appraised Value and the Tax Rate... The Relationship

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How Is Property Appraised?

At least once every three years, each parcel of property in Brevard County is visited and reviewed by one of our appraisers in accordance with Florida Law.

Individual property values may be adjusted between scheduled appraisals due to sales activities or other variables affecting real estate values in your neighborhood. Sales of similar properties are a strong indicator of values in the real estate market in your area.

To determine the value of property, the Property Appraiser will consider such factors as what other properties are selling for (recent sales), what would be the cost to replace the property today, how much it takes to operate the property and to keep it in repair, what rental income the property may earn, and many other applicable factors that affect its value.

Using these facts, the Property Appraiser has three primary methods available for consideration in determining your property's value, that is; through the sales comparison/market approach, the cost approach and the income approach. As a result of the large number of properties involved in various categories, the Property Appraiser must employ applicable features of each method and apply uniform rates to similar types of properties in a process known as mass appraisal.

Sales Comparison Approach.

In order to determine the value of your property, the Property Appraiser must first know what properties have sold, and how much they are selling for in today's market. By maintaining a database of real estate transactions we can arrive at the property value by studying sales of comparable properties. This is the sales comparison approach to property valuation.

Cost Approach.

This method of appraising property is based on how much it would cost today to build an identical structure on the property. If the property is not new, we must also determine how much the building has lost value over time (depreciated). The value of the underlying land must also be determined.

Income Approach.

This method is preferred when evaluating income-producing rental and commercial property. The amount of revenue your property would produce if it were rented as apartments, a store, or anoffice building. Consideration is given to operating expenses, taxes, insurance, maintenance costs, and the return or profit that could be reasonably expected on the property.

Mass Appraisal.

There are basically only two kinds of appraisal: fee appraisal and mass appraisal. Both types of appraisals utilize the same basic appraisal principles and theories. The fee appraisals consist of those methods just discussed (the Sales Comparison, Cost and Income Approaches) where only one parcel of property is evaluated at a time. Mass appraisal values the entire County where market areas, neighborhoods, subdivisions and large groupings of similar properties are appraised at one time by adopting standard techniques and using uniform rates so that resultant appraised values are equitable for all properties within an acceptable statistical deviation.

Market Value and Assessed Value... What's the Difference?

When you receive your Truth In Millage (TRIM) Notice in the month of August each year, you will note that there is a column for "market value" and a column for "assessed value." The "market value" of a property is defined as the most probable price which the property should bring in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeably, and neither being under duress to act, and represents the estimated net proceeds to the seller. This is the value established for ad valorem purposes in accordance with section 193.011 (1) and (8), Florida Statutes. This value does not represent anticipated selling price for the property appraised. See Sales Comparison/Market Value Approach for additional information on what constitutes market value. State law requires the Property Appraiser to make a determination of the market value of all property on the first day of January each year. This is the value found in the TRIM Notice column marked "Market Value."

Including a market value for your property resulted from the legislation implementing Constitutional Amendment 10 in 1994. As a result of the Amendment, the Property Appraiser must now also determine and maintain your property's market value because the market value of homestead property may and probably will increase at a greater rate than the assessed value (see the Calculating Residential Assessed Value example below). The market value terminology was, therefore, used by the State to differentiate between the two values for homestead properties. However, for properties other than homestead, both the market value and the assessed value will be the same, with the exception of agricultural and similarly assessed property pursuant to other preferential tax treatment as provided by law.

The "assessed value" is defined as the value of each property used in the computation of the property taxes. After allowances for personal exemptions, it becomes the taxable value to which the tax rate is applied. However, the implementation of Constitutional Amendment 10 in 1994, limits subsequent annual increases in assessed value. Amendment 10 established the annual increase as either the Consumer Price Index (CPI) or 3%, whichever is less. The following illustrates how this works mathematically:

EXAMPLE
Calculating Residential Assessed Value For Homestead Property

Time Frame	Market Value($)	Assessed Value($)	CPI From Prior Year or 3% Cap	Assessed Value Increase*
Base Year 1994	100,000	100,000	Not Applicable	Not Applicable
1995	100,000	100,000	2.7	-0-
1996	110,000	102,500	2.5	100,000 x .025 = 2,500
1997	110,000	105,575	3.0	102,500 x .030 = 3,075
1998	115,000	107,370	1.7	105,575 x .017 = 1,795
1999	125,000	109,165	1.6	107,370 x .016 = 1,718
2000	120,000	112,110	2.7	109,165 x .027 = 2,945
2001	125,000	115,470	3.0	112,110 x .030 = 3,360
2002	135,000	117,315	1.6	115,470 x .016 = 1,845
2003	160,000	120,130	2.4	117,315 x .024 = 2,815
*(Previous year assessed value) x (Current year CPI or 3% Cap)

To fully understand the preceding example, it is important to emphasize that the "Base Year" will always be either the first year the program started (1994) or the first year that the homestead exemption was filed and approved. The assessed value will also always equal the market value in the base year. In the example, the assessed value stayed at $100,000 in 1995 because there was no increase in market value. In 1996, since the market value increased, the CPI of 2.5% was applied, as it was lower than the Amendment 10 cap of 3%. In other words, a 2.5% increase applied to the previous year assessed value results in an increase in assessed value of $2,500 in this particular case. In the example, this same procedure has been applied for each calendar year thereafter to exemplify how it works on a year to year basis with different CPIs. The assessed value is either full market value or less; assessed value can not exceed the market value. This limitation applies until such time as the homestead property is sold and the market value becomes the assessed value in a new base year, at which time the process starts over.

Factors to Consider in Deriving Just Valuation.

Chapter 193.011, Florida Statutes

In arriving at just valuation as required under s.4, Art. VII of the State Constitution, the property appraiser shall take into consideration the following factors:

The present cash value of the property, which is the amount a willing purchaser would pay a willing seller, exclusive of reasonable fees and costs of purchase, in cash or the immediate equivalent thereof in a transaction at arm's length;.
The highest and best use to which the property can be expected to be put in the immediate future and the present use of the property, taking into consideration any applicable judicial limitation or local or State land use regulation and considering any moratorium imposed by executive order, law, ordinance, regulation, resolution, or proclamation adopted by any governmental body or agency or the Governor when the moratorium or judicial limitation prohibits or restricts the development or improvement of property as otherwise authorized by applicable law. The applicable governmental body or agency or the Governor shall notify the property appraiser in writing of any executive order, ordinance, regulation, or proclamation it adopts imposing any such limitation, regulation, or moratorium;
The location of said property;
The quantity or size of said property;
The cost of said property and the present replacement value of any improvements thereon;
The condition of said property;
The income of said property; and
The net proceeds of the sale of the property, as received by the seller, after deduction of all of the usual and reasonable fees and costs of the sale, including the costs and expenses of financing, and allowance for unconventional or atypical terms of financing arrangements. When the net proceeds of the sale of any property are utilized, directly or indirectly, in the determination of just valuation of realty of the sold parcel or any other parcel under the provisions of this section, the Property Appraiser, for the purposes of such determination, shall exclude any portion of such net proceeds attributable to payments for household furnishings or other items of personal property.

Chapter 200, F. S. (1998), 200.065 - Method of Fixing Millage

(1) Upon completion of the assessment of all property pursuant to s. 193.023, the property appraiser shall certify to each taxing authority the taxable value within the jurisdiction of the taxing authority. This certification shall include a copy of the statement required to be submitted under s. 195.073(3), as applicable to that taxing authority. The form on which the certification is made shall include instructions to each taxing authority describing the proper method of computing a millage rate which, exclusive of new construction, additions to structures, deletions, increases in the value of improvements that have undergone a substantial rehabilitation which increased the assessed value of such improvements by at least 100 percent, and property added due to geographic boundary changes, will provide the same ad valorem tax revenue for each taxing authority as was levied during the prior year. That millage rate shall be known as the "rolled-back rate." The information provided pursuant to this subsection shall also be sent to the tax collector by the property appraiser at the time it is sent to each taxing authority.

(2) No millage shall be levied until a resolution or ordinance has been approved by the governing board of the taxing authority which resolution or ordinance must be approved by the taxing authority according to the following procedure:

(a) l. Upon preparation of a tentative budget, but prior to adoption thereof, each taxing authority shall compute a proposed millage rate necessary to fund the tentative budget other than the portion of the budget to be funded from sources other than ad valorem taxes. In computing proposed or final millage rates, each taxing authority shall utilize not less than 95 percent of the taxable value certified pursuant to subsection (1).

2. The tentative budget of the county commission shall be prepared and submitted in accordance with s. 129.03.

3. The tentative budget of the school district shall be prepared and submitted in accordance with chapter 237, provided that the date of submission shall not be later than 24 days after certification of value pursuant to subsection (1).

4. Taxing authorities other than the county and school district shall prepare and consider tentative and final budgets in accordance with this section and applicable provisions of law, including budget procedures applicable to the taxing authority, provided such procedures do not conflict with general law.

Chapter 12D-1 Rev. 12-31-98 -

(2) "Just Value" -- "Just Valuation", "Actual Value" and "Value" - Means the price at which a property, if offered for sale in the open market, with a reasonable time for the seller to find a purchaser, would transfer for cash or its equivalent, under prevailing market conditions between parties who have knowledge of the uses to which the property may be put, both seeking to maximize their gains and neither being in a position to take advantage of the exigencies of the other.

How Can Appraised Value Change From Year to Year?

Property tax is "ad valorem," which means, "based upon value." When the market value of a property changes, so may its appraised value. Your property's market value can change as a result of the economy in general. For example, in a community with a healthy growth rate, with more and more people taking up residence (i.e. more buyers in the market place), the demand for housing usually increases, which in turn increases the market value for your home. Conversely, with a sluggish economy, slow growth, and no demand or few potential buyers in the market, your residential property's value will probably flatten or decline.

The Property Appraiser creates none of these market situations; individuals in the community create value by their transactions in the market place. The Property Appraiser is, however, mandated by State Law with the legal responsibility to discover these market changes and to appraise all affected properties accordingly.

What Is The Role Of The Florida Department Of Revenue In The Property Appraiser's Work?

To ensure that the Property Appraiser is properly assessing the value of property, the Property Appraiser's assessment roll is audited by the State Department of Revenue (DOR) with respect to whether the assessed values reflect values at current market rates. The same roll is also audited to ensure that there is equity in the values established, i.e. like properties are similarly valued. When the ratio of level of assessment to actual sales falls below the State required level, the Property Appraiser must adjust the assessed value or the State DOR will not approve the assessment roll. Therefore, value changes from year to year because the market place is dynamic, causing the values of properties to change, which the Property Appraiser must account for every year, as of January 1. If the assessment roll is not approved by the State Department of Revenue, taxing authorities cannot proceed with their annual budgets.

What Are Special Assessments and Why Are They on Tax Bills?

Special assessments have absolutely nothing to do with the value of property or the duties of the Property Appraiser. Special assessments can be levied by various government entities so empowered by law. For cost savings, and for convenience purposes, these governmental entities have, in turn, requested that the tax bill identify these special assessment fees for payment as part of the total tax bill.

Appraised Value and The Tax Rate

The Property Appraiser is not the Tax Collector, and the Property Appraiser has nothing to do with the total amount of taxes collected. As a property owner, however, you should not only be interested in what value the Property Appraiser places on your property, but in how the amount of taxes you must pay is determined. This is the way it works:

If the Property Appraiser has found the assessed value of your home to be $55,000 and you apply for and are found to be eligible for the $25,000 Homestead Exemption, that $25,000 is deducted from the assessed value of your home to leave a taxable value of $30,000.

For this example, assume a total tax rate of 17 mills ($17.00 of taxes per $1,000 of taxable value) which is an accumulation of all the tax rates set by each of the taxing authorities. Divide the taxable value of your home ($30,000) by $1,000, which is 30; multiply that 30 by $17.00 to determine what your property tax will be, which in this case equals $510. This is the amount of tax due on your home by March, unless you pay the Tax Collector early and receive a discount. If paid in the following months, the discounts are: 4% in November, 3% in December, 2% in January and 1% in February.