Who Pays Property Taxes During Probate in Florida?

When a deceased person’s estate enters probate in Florida, the estate is typically responsible for paying the taxes during the probate process—but this isn’t always as straightforward as it sounds.

How these taxes are handled can have long-term effects on beneficiaries, heirs, and the overall value of the estate assets. The answer depends on a few key factors, but in general, the estate is obligated to continue paying property taxes until the property is transferred to the beneficiaries or sold. Let’s take a closer look at how property taxes are handled during probate in Florida.

The Personal Representative’s Duty to Pay Debts and Expenses

In a formal Florida probate administration, the court appoints a personal representative (also called an executor) to manage the estate. One of the personal representative’s key duties is to pay valid debts and expenses of the estate, including any taxes that come due during the probate process.

Property taxes are an obligation that attaches to real estate each year, with tax bills being mailed out in November. So if the decedent passed away owning real property in their sole name, the estate is responsible for the prorated share of that year’s property taxes, as well as any unpaid taxes from prior years.

Importantly, property taxes in Florida have priority over most other debts of the estate. According to Florida Statute § 733.707, the personal representative must pay estate debts in a certain order, with property taxes being in the “Class 3” category, coming after the costs of administering the estate and funeral arrangements.

This means that even if the estate does not have enough money to pay all of its debts, the personal representative should make sure to pay any outstanding property taxes before most other creditor claims. Failing to do so could lead to issues like tax liens or even the loss of the property to a tax deed sale.

What If There’s a Mortgage?

In some cases, an estate property may be subject to a mortgage, with the loan servicer paying the property taxes through an escrow account. If that’s the case, the personal representative should contact the lender to notify them of the death and ensure that the taxes continue to be paid while the estate is in probate.

However, if the mortgage payments stop and the loan servicer ceases paying the property taxes, the taxes become the estate’s responsibility. The personal representative would need to use estate funds to pay the taxes and maintain the property until it can be transferred or sold.

Timing of Tax Payments

As mentioned above, Florida property taxes for each year become due on Nov 1st. This means that if the decedent passes away early in the year, the estate may need to budget and plan proactively to pay those taxes when the bill eventually arrives in November.

That said, there are discount periods for paying Florida property taxes early. For example, there’s a 4% discount for paying in November versus a 3% discount in December, 2% in January, and 1% in February. Paying in March nets no discount, and taxes become delinquent if not paid by March 31st.

The personal representative, in consultation with their probate attorney, should weigh the benefits of any early payment discount against the estate’s cash flow needs and anticipated timeline for being able to close the estate or sell the property.

Closing the Estate or Selling the Property

Ideally, the estate will have enough assets to pay any property taxes and other priority expenses and then close probate and deed the property to the beneficiaries before the next year’s tax bill comes due. At that point, the beneficiaries would assume the obligation of paying the taxes going forward.

In situations where the estate cannot afford to keep the property long-term, the personal representative may need to seek court permission for an estate sale. The proceeds from selling the property would then be used to pay any outstanding property taxes and other valid debts of the estate before distributing the remainder to the beneficiaries.

If the property is “underwater” with more debt than value, the estate may even need to consider a short sale or surrendering the property to a foreclosing lender. However, in most cases, maintaining the tax obligation is important to avoid losing the property altogether.

The Bottom Line on Property Taxes in Probate

The key takeaway is that, while an estate is in probate in Florida, the personal representative has a fiduciary duty to ensure that the decedent’s real estate taxes get paid in a timely manner before most other debts. Keeping the taxes current protects the estate property for the benefit of the beneficiaries.

Of course, every estate is different, and an experienced Florida probate attorney can provide guidance on how to prioritize debts and expenses based on the estate’s unique assets and cash flow situation.

If you are a personal representative and have questions about your duties and how to handle property taxes during probate or retitle inherited property, we invite you to contact Vollrath Law to schedule a consultation. Our knowledgeable probate attorneys are here to assist personal representatives and beneficiaries handle the Florida probate process.