THE APPRAISAL PROCESS AND YOUR TAXES
While many people think the Property Appraiser determines the amount of taxes each property owner pays, in reality the title "Property Appraiser" explains it all.
The Property Appraiser and his staff are charged with placing a fair and just value on each individual property in Hillsborough County. The role of setting the amount of taxes to be paid as a result of the appraised value of a property is that of the various taxing authorities, including the County Commission, School Board, local municipalities, Tampa Port Authority, Parks & Recreation and others. These bodies use our appraisals as a base for setting the millage rate.
The value of real estate fluctuates due to many factors. Factors influencing value include property use, the size and condition of improvements on the site and the local real estate market.
The Florida Constitution requires our office to assess property based on its market value. A simple definition of market value is the typical price a willing buyer would pay to a willing seller. To estimate market value, the property appraiser's office uses the 3 traditional approaches to value, Cost Approach, Market Approach and Income Approach.
It is important to remember that the Property Appraiser does not create value. People create value by buying and selling real estate in the open market place. The Property Appraiser has the legal responsibility to study those transactions and appraise your property accordingly. For most property types, our estimate of market value is based on sales of similar properties.
In addition to the Market Approach (sales of similar properties), two other methods are used to assess property - the cost approach and the income approach. The cost approach is based on how much it would cost today to build a replacement structure on a parcel. If your property is not new, the appraiser must also estimate how much value the building has lost over time (depreciation). The appraiser must also estimate the value of the land - without buildings or any improvements.
The income approach is the third way to evaluate property. This approach is typically applied to income producing commercial properties. It requires a study of how much revenue the property would generate if it were rented. The appraiser must consider operating expenses, taxes, insurance, maintenance costs, and the return or profit most people would expect for that type of property.
In estimating value for any property, Florida Statutes 193.011 requires the property appraiser to consider 8 factors:
- The present cash value.
- The highest and best use of the property.
- The location of the property.
- The quantity or size of said property.
- The cost of said property.
- The condition of said property.
- The income of said property.
- The net proceeds of the sale of said property.
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.