Orlando New Construction Taxes: Why Year Two Costs More

TL;DR

• Your first tax bill is often land-only. Florida assesses property on January 1, and a home that isn't substantially complete that day is taxed mostly on the lot for that year.
• Year two reflects the finished home. At 15 to 19 mills, the range in most Orange County residential districts, a $1.2 million taxable value owes roughly $18,000 to $22,800 a year before exemptions and CDD assessments.
• File for homestead by March 1. You must own and live in the home on January 1. At this price point the exemption is modest; the bigger benefit is the Save Our Homes cap of 3% or CPI, whichever is lower.
• Portability only works within Florida. Buyers from other states start with assessed value equal to market value. Selling a Florida homestead lets you transfer up to $500,000 of savings.
• Escrow on the full bill from day one, so a shortage doesn't raise your payment in year two.

The first property tax bill on a new construction home in Central Florida is often the smallest one you'll ever pay. That sounds like good news until the second bill arrives. Every year I talk with buyers relocating to Orlando who built their budget around a land-only tax figure and then watched their monthly payment climb in year two.

I'm Nicole Mickle, a Central Florida relocation and new construction specialist. Before I became a realtor, I spent 23 years running a settlement company that coordinated closings nationwide, so I've prorated a lot of new construction tax bills. This guide explains how Florida taxes a new build, what a $1 million-plus home actually costs each year in Orange County, and the timing decisions that can save you thousands.

How are property taxes calculated on new construction in Florida?

Florida county property appraisers assess every property as of January 1. Under Florida Statute 192.042, improvements that are not substantially complete on January 1 receive no value, so a home finished during the year is usually taxed on the land alone for that first year. The next year, the finished home is assessed at market value, and your bill is that value, minus exemptions, times your tax district's millage rate.

A mill is $1 of tax for every $1,000 of taxable value. Your millage rate is the combined rate of every taxing authority where the home sits: the county, the school board, your city if you're inside city limits, and special districts such as water management.

Why does the tax bill jump in year two?

The tax bill on a new build jumps in year two because the first bill usually covers only the lot. Once the home is complete on January 1, the property appraiser adds the full value of the house, and the bill can rise from a few thousand dollars to five figures in a single year.

Here is how that typically plays out for a home that closes partway through the year:

When I ran closings, this is where buyers got caught. Taxes at closing are prorated using the most recent bill, which for a new build is often the land-only bill. If your lender also set up your escrow account on that number, the account runs short once the full bill arrives. Your lender then collects the shortage and raises your monthly payment at the same time. Ask your lender to escrow on an estimate of the full, improved value from day one.

What are property tax rates in Orlando and Central Florida?

In Orange County, the 2025 final millage rates certified by the Orange County Property Appraiser run from about 15 to 19 mills in most residential tax districts. Seminole, Osceola, Lake, and Polk counties publish their own rates, and the rate can change from one side of a street to the other if a city boundary runs between them.

Here is what that means at the price points my clients usually shop. A new home with a taxable value of $1.2 million would owe roughly $18,000 a year at 15 mills and about $22,800 at 19 mills, before any homestead exemption and before any community development district (CDD) assessment. At $2 million, the same range is roughly $30,000 to $38,000.

Those are planning numbers, not quotes. The property appraiser's market value for your home may differ from your purchase price, and millage rates are set every year. The point is to budget on the full, improved value, not on the first bill.

Before you commit to a community, run your real monthly number through the mortgage calculator. Enter the full annual tax estimate, your insurance, and any HOA or CDD fees, not the land-only bill from the listing.

Run your numbers in the mortgage calculator

How does the Florida homestead exemption work on a new home?

To claim the Florida homestead exemption, you must own the home and live in it as your permanent residence on January 1, then file with your county property appraiser by March 1. In 2026, the exemption removes up to $51,411 of assessed value, according to the St. Johns County Property Appraiser's published inflation-adjusted figure. The first $25,000 applies to all taxes, and the rest applies to non-school taxes only.

On a $1 million-plus home, the exemption itself saves a few hundred dollars a year. The bigger benefit is the Save Our Homes cap. Once your homestead is in place, Florida limits annual increases in your assessed value to 3% or the change in the Consumer Price Index, whichever is lower. In a rising market, that cap is worth far more than the exemption.

Three timing details matter most for new construction buyers:

• Closing date and January 1: If you close and move in on December 20, you can file for homestead by March 1 of the new year. Close on January 5 and you wait almost a full year longer for the exemption and the cap.
• The March 1 deadline: Late filing can mean losing the exemption for that year. I put it on my clients' calendars the day we close.
• Portability only moves within Florida: If you're selling a Florida homestead, you can transfer up to $500,000 of your Save Our Homes savings to your new home if you establish the new homestead within three years. Buyers moving from another state start fresh, with assessed value equal to market value.

What is Amendment 3, and how could it affect relocating buyers?

As of October 2026, Florida voters will decide on Amendment 3 in the November 3, 2026 general election, and it needs 60% approval to pass. According to the Manatee County Property Appraiser's FAQ, it would raise the homestead exemption from non-school taxes to $150,000 in 2027 and $250,000 in 2028, with inflation adjustments after that.

Two provisions matter for buyers moving to Central Florida:

• New residents start lower. People who establish Florida residency on or after January 1, 2027 would begin with a $50,000 exemption and qualify for the larger amount starting January 1 of their fifth year.
• Second homes get a tighter cap. The annual assessment cap for non-homestead property would drop from 10% to 5% for non-school taxes.

School taxes would not change. If you're relocating and the amendment passes, the date you establish Florida residency could affect your taxes for years, so confirm the details with the property appraiser or a tax professional before you set a move date. I'll update this section once the results are certified.

What else shows up on a new construction tax bill?

Many Central Florida master-planned communities are financed through a community development district, and CDD assessments appear on your property tax bill as non-ad valorem assessments. They usually include an operations and maintenance portion and, in many communities, a debt portion that repays the bonds used to build roads, utilities, and amenities.

CDD assessments vary widely from one community to the next, and two communities a few miles apart can differ by thousands of dollars a year. Ask the builder for the current CDD budget and whether the debt portion can be paid off early. I break down how CDDs fit into a monthly budget in the real monthly cost of a $1M home in Orlando.

Because tax districts, CDDs, and HOA fees change community by community, the community you choose shapes your tax bill as much as the house does. If you're still deciding where in Central Florida to live, the neighborhood quiz asks five questions about your lifestyle, budget, and priorities and gives you personalized recommendations in about two minutes.

Take the neighborhood quiz

What do new construction buyers get wrong about property taxes?

The most common mistake I see is budgeting from the builder's tax estimate or the listing's prior-year figure. On a new build, both often reflect the land alone. Here are the others:

• Assuming homestead is automatic. It isn't. You have to file, and the March 1 deadline doesn't move.
• Ignoring the TRIM notice. Each August, the property appraiser mails a Truth in Millage notice with your proposed value and taxes. If the value looks wrong, you generally have 25 days from the mailing to file a petition with the Value Adjustment Board.
• Treating a second home like a primary home. A second home or investment property gets no homestead exemption and has a 10% annual assessment cap on non-school taxes, with school taxes based on full market value.
• Missing the early payment discount. Florida tax bills go out in November and are due by March 31, with a 4% discount for paying in November.

How do you budget for property taxes on a new build?

Budget for property taxes on a new build in Central Florida by estimating the full, improved bill before you sign, not after you close. These are the steps I walk my buyers through:

• Find the tax district. Look up the community's parcels on the county property appraiser's site and note the total millage.
• Estimate the full bill. Multiply your expected market value by the millage, then add the CDD assessment.
• Escrow on the full number. Ask your lender to set up escrow on the improved value, not the land-only bill.
• Time your closing. If the completion date is flexible, closing and moving in before January 1 can start your homestead a year sooner.
• File homestead by March 1. Then watch for your TRIM notice in August.

Planning a new construction purchase in Central Florida?

Property taxes are one line in a builder's contract, and they're the line most likely to surprise you a year later. I review how a builder handles tax prorations at closing, confirm the CDD budget before you sign, and plan your closing date around homestead timing. That is the closing-table experience I bring to every new construction purchase, along with the builder vetting steps in my Orlando builder checklist.

If you're buying a new home in Central Florida in the next year, let's talk through your numbers and the communities that fit them.

Schedule a conversation with Nicole