Taxes affecting real estate on the Florida exam
Last reviewed: November 2026
Taxes affecting real estate are exam area XVIII, 3% of the Florida sales associate exam, and the area includes math. The core skill is Florida property tax calculation: start with assessed value, subtract exemptions to get taxable value, then apply the millage rate. Florida's homestead exemption has two parts, and only one of them applies to school taxes. A short section on federal tax rules for homeowners follows.
Key terms from the statutes
| Term | Meaning |
|---|---|
| Ad valorem tax | A tax based on the assessed value of property; same as "property tax" (s. 192.001(1), F.S.) |
| Assessed value | The annual value set by the property appraiser: just (market) value, or value as limited by the Florida Constitution, for example by Save Our Homes (s. 192.001(2)) |
| Taxable value | Assessed value minus any applicable exemptions (s. 192.001(16)) |
| Mill | One one-thousandth of a dollar. "Millage" can mean one levy or all levies combined (s. 192.001(10)) |
| Who does what | The county property appraiser values property; the county tax collector collects the tax (s. 192.001(3), (4)) |
The formula: tax = taxable value × millage ÷ 1,000. The statute describes the same step: millage is converted to a decimal (thousandths of a dollar) and multiplied by taxable value (s. 192.001(6)).
The Florida homestead exemption, two parts
- First $25,000 of assessed value is exempt from all taxes, except assessments for special benefits. You must have legal or beneficial title on January 1 and make the home your permanent residence (s. 196.031(1)(a), F.S.).
- Additional exemption of up to $25,000 on assessed value above $50,000, for all levies other than school district levies. The statute adjusts this $25,000 for inflation each January 1 when the CPI change is positive (s. 196.031(1)(b)).
Other rules in s. 196.031: the deed must be recorded before the exemption is granted; no person or dwelling gets more than $25,000 under (1)(a); someone claiming a residency-based exemption in another state is not eligible. The application is due to the county property appraiser by March 1; missing it waives the exemption for that year, with exceptions (s. 196.011(1)(a)).
Exemption amounts are set by statute and the Florida Constitution and can change by law or amendment. The Florida Department of Revenue describes the homestead exemption as reducing taxable value "by as much as $50,000." Learn the structure, then check the current figures with the county property appraiser.
Florida property tax calculation, step by step
A homestead has an assessed value of $290,000. School millage is 6.0 mills and all other levies total 12.5 mills. Use $25,000 for each part of the exemption, the base amounts in s. 196.031(1). The second part is indexed for inflation, so the current county figure can be higher.
| Levy | Taxable value | Tax |
|---|---|---|
| School (first $25,000 only) | $290,000 − $25,000 = $265,000 | $265,000 × 6.0 ÷ 1,000 = $1,590 |
| All other levies (both parts) | $290,000 − $25,000 − $25,000 = $240,000 | $240,000 × 12.5 ÷ 1,000 = $3,000 |
| Total | $4,590 |
If assessed value is $60,000, the additional exemption is only the part above $50,000, which is $10,000. When a question gives one combined millage rate and one taxable value, just multiply. More drills are in real estate exam math.
Save Our Homes: the assessment cap
After the first year of homestead, the annual change in assessed value cannot exceed the lower of 3% or the CPI change for the prior year (s. 193.155(1), F.S.). If assessed value was $200,000 and CPI rose 2.1%, the new assessed value can be at most $204,200; if CPI rose 4%, the cap is 3%, or $206,000. Assessed value never exceeds just value (s. 193.155(2)). After a change of ownership, the property is reassessed at just value on the next January 1 (s. 193.155(3)(a)).
When Florida property taxes are paid
Taxes are due November 1 and become delinquent April 1 of the next year, or later if the tax notice went out late (s. 197.333, F.S.). Early payment earns a discount: 4% in November, 3% in December, 2% in January, 1% in February (s. 197.162(1)). The $4,590 bill paid in November is $4,590 − $183.60 = $4,406.40. Taxes are paid in arrears, which is why the seller is debited at closing (see closing prorations).
Federal tax basics for homeowners
- Property taxes: state and local real property taxes can be taken as an itemized deduction, subject to limits (IRS Topic 503).
- Mortgage interest: deductible only when you itemize, on a loan secured by a main or second home. IRS Publication 936 (2025) limits it to interest on the first $750,000 of debt ($375,000 married filing separately), with higher limits for debt incurred before December 16, 2017.
- Sale of a main home: up to $250,000 of gain can be excluded, or $500,000 for a married couple filing jointly, if you owned and lived in the home at least 24 months of the 5 years before the sale (IRS Publication 523).
- 1031 exchange: gain is deferred on an exchange of real property held for business or investment for like-kind real property. Since 2018 it applies only to real property. Property held primarily for sale does not qualify, and gain is taxed to the extent of any money or other non-like-kind property received ("boot") (IRS, "Like-kind exchanges – Real estate tax tips").
Exam traps
- Subtract exemptions before multiplying by millage.
- The additional homestead exemption does not apply to school taxes.
- Divide mills by 1,000, not 100.
- Save Our Homes caps the change in assessed value, not the tax bill.
- A 1031 exchange is for investment or business property, never a personal residence.
Practice question
A Florida homestead is assessed at $180,000. School millage is 7 mills and non-school millage is 14 mills. Using $25,000 for each homestead exemption, what is the annual tax?
A) $2,730. B) $2,905. C) $3,255. D) $3,780.
Answer: B. School: ($180,000 − $25,000) × 7 ÷ 1,000 = $1,085. Non-school: ($180,000 − $50,000) × 14 ÷ 1,000 = $1,820. Total $2,905. A applies both exemptions to school taxes; C applies only one exemption to everything.
Test yourself
The free Florida practice test includes a millage calculation and a homestead question with worked explanations. For more tax and closing math with timed exams, see the paid question bank.
Sources: ss. 192.001, 193.155, 196.011, 196.031, 197.162, 197.333, F.S.; Florida Department of Revenue, "Property Tax Exemptions and Additional Benefits"; IRS Topic 503, Publications 523 and 936, and "Like-kind exchanges – Real estate tax tips". Real Estate Drill is an independent study tool, not tax advice. We are not affiliated with FREC, DBPR, Pearson VUE, the Florida Department of Revenue or the IRS.