Florida homeowners facing financial hardship often focus entirely on the mortgage while overlooking property taxes. But unpaid property taxes can independently trigger a tax certificate and tax deed process that can result in losing your home even if your mortgage is paid -- and paid property taxes are a requirement of most mortgage agreements. At the same time, Florida offers a property tax deferral program for qualifying senior homeowners that can reduce annual payment pressure -- but deferred taxes carry their own risks that are especially important to understand when you are already in or approaching foreclosure.
Florida Property Tax Deferral: The Basics (F.S. 197.252)
Florida Statute 197.252 authorizes counties to defer property taxes for qualifying homeowners who meet all of the following criteria:
- Age: 65 or older as of January 1 of the tax year
- Income: household income at or below the threshold set annually by the Department of Revenue (currently $10,000 for the basic program; some counties offer enhanced programs with higher income thresholds)
- Homestead: the property must have a valid homestead exemption
- Lien cap:total deferred taxes plus all other recorded liens cannot exceed 85% of the property's assessed value
The application must be submitted to the county tax collector by March 31 of the year the taxes are due.
How Deferred Taxes Work as a Lien
Deferred property taxes under F.S. 197.252 do not disappear -- they are deferred. The county records a first-priority lien against the property for the deferred amount. This lien:
- Is senior to all private liens, including your first mortgage
- Accrues interest at 7% per year on the outstanding deferred balance
- Becomes immediately due and payable when the property is sold, transferred, ceases to be homestead property, or the owner no longer qualifies for the deferral program
In a foreclosure, the certificate of title issued after the auction constitutes a transfer of ownership -- triggering immediate repayment of all deferred taxes from the sale proceeds.
Priority at a Foreclosure Sale
In a Florida judicial foreclosure sale, lien priority determines who gets paid from the proceeds:
| Lien Type | Priority | Notes |
|---|---|---|
| Current property taxes (unpaid) | Highest -- 1st | County charges; survives foreclosure unless paid |
| Deferred property taxes (F.S. 197.252) | Senior -- effectively 1st | Plus 7% accrued interest; must be paid at title transfer |
| First mortgage (foreclosing lender) | Per recording date | Paid from proceeds after taxes |
| Junior liens (second mortgages, HELOCs, judgment liens) | Per recording date -- after first mortgage | Extinguished if not named and served; personal debt survives |
| Surplus to homeowner | Last | F.S. 45.032; 60-day claim deadline |
What to Do If You Are in Foreclosure with Deferred Taxes
If you currently have deferred taxes and are in or approaching foreclosure:
- Get the current deferred balance from your county tax collector. Include the accrued interest. This tells you exactly how much of any auction proceeds will be consumed by the deferred tax lien before any surplus reaches you.
- Evaluate whether a pre-foreclosure sale makes more sense. If you sell the home voluntarily before the foreclosure auction, you can pay the deferred taxes at closing from the sale proceeds -- and potentially keep equity remaining after the mortgage and deferred taxes are paid.
- Understand the surplus funds calculation. The 60-day surplus funds claim window under F.S. 45.032 applies to whatever remains after all senior liens (including deferred taxes) are paid.
- Do not stop paying current property taxes simply because older years are deferred. Unpaid current-year taxes create additional senior liens and can independently lead to a tax certificate being issued.
Property Tax Exemptions vs. Deferral
Most homeowners in financial distress are better served by maximizing property tax exemptions than deferring taxes. Exemptions permanently reduce your tax bill; deferral only postpones it at 7% annual interest. Florida offers:
- Homestead Exemption -- up to $50,000 reduction in assessed value for primary residences (Art. VII Sec. 6 FL Constitution)
- Senior Low-Income Additional Exemption -- up to $50,000 additional exemption for homeowners 65 and older with household income below the limit set by each county (some counties have eliminated the income limit)
- Save Our Homes cap -- limits annual assessment increases to 3% or CPI for homestead properties; preserving this cap through a pre-foreclosure sale avoids losing it entirely (see homestead portability)
- Veteran and disability exemptions -- additional reductions for eligible homeowners
Contact your county property appraiser by March 1 of the tax year to apply for any exemption you may have missed.
About Barrett Henry and Florida Foreclosure Help
Barrett Henry is a Broker Associate at REMAX Collective with 23-plus years of Florida real estate experience. He helps homeowners across all 67 Florida counties evaluate every financial factor -- including property tax liens, deferred tax balances, and surplus fund claims -- before deciding between a pre-foreclosure sale, short sale, or other exit. Use the free equity estimator to understand your net position, then contact us for a no-cost consultation.
