There are two important homestead concepts in Florida law. Florida’s Constitution protects homestead property from creditors. A separate provision of Florida law provides an partial exemption from property taxes for homestead properties. This article deals with the homestead tax exemption. Click here to read our article on HOMESTEAD PROTECTION.
What is the Florida Homestead Tax Exemption?
The Florida homestead tax exemption offers homeowners a reduction in their property’s assessed value by up to $50,000, which in turn lowers their property taxes. This exemption applies to various types of residences, including single-family homes, condominiums, and mobile homes. In addition to the initial $50,000 exemption, Florida law limits the annual increase in assessed value to the lesser of 3% or the Consumer Price Index (CPI) increase, a provision known as the "Save Our Homes" benefit.
How to Qualify for the Florida Homestead Exemption
To qualify for the homestead exemption, homeowners must meet the following criteria:
Ownership: You must own the property.
Permanent Residence: The property must be your primary and permanent residence as of January 1 of the tax year.
Residency Requirements: You must be a Florida resident, intending to make the property your permanent home. You can establish your inention to make the property your homestead by filing a Declaration of Domicile with your local clerk of court.
Application: An application must be filed with the county property appraiser’s office by March 1 of the tax year.
How to Declare Your Property as a Homestead
Declaring your property as a homestead in Florida involves the following steps:
Obtain the Application: The application form is available from your county property appraiser’s office, either online or in person.
Complete the Application: Provide personal information, property details, and proof of residency (e.g., Florida driver’s license, voter registration, or vehicle registration).
Submit the Application: Submit the completed form to the property appraiser’s office by March 1 of the year you seek the exemption.
Annual Renewal: Once approved, the exemption automatically renews each year, provided the property remains your primary residence.
The $50,000 Homestead Exemption and Save Our Homes Cap
First $25,000 Exemption: The first $25,000 applies to all property taxes, including school district taxes.
Second $25,000 Exemption: The second $25,000 exemption applies to the assessed value between $50,000 and $75,000 and does not apply to school taxes.
Example: If your home is assessed at $100,000, the homestead exemption reduces the taxable value by $50,000, resulting in a taxable value of $50,000. This can significantly reduce the property tax bill.
Florida's Homestead Exemption Portability
The "Save Our Homes" portability provision allows you to transfer the accumulated property tax savings (due to the assessment cap) to a new homestead within Florida. This provision can help you maintain lower property taxes when moving to a new home.
Example: If your current home has a market value of $300,000 but an assessed value of $200,000 due to the Save Our Homes cap, you have $100,000 in portability savings. If you purchase a new home for $400,000, you can apply that $100,000 savings, potentially lowering the new home’s assessed value to $300,000.
Legal Authority
he Florida law that governs the homestead tax exemption is found in Florida Statutes § 196.031. This statute outlines the eligibility criteria for the homestead exemption, the amount of the exemption, and how it applies to property taxes in Florida.
Here’s a summary of the key provisions:
Eligibility: The statute specifies that the homestead exemption applies to homeowners who have legal or equitable title to real property in Florida and occupy it as their permanent residence.
Exemption Amount: The law provides a property tax exemption of up to $50,000, which is divided into two parts: the first $25,000 applies to all property taxes, and the second $25,000 applies to non-school taxes on the assessed value between $50,000 and $75,000.
Save Our Homes Cap: The statute also incorporates the Save Our Homes provision, which caps annual increases in the assessed value of homestead property to 3% or the percentage change in the Consumer Price Index (CPI), whichever is lower.
RECENT CASES ON FLORIDA’S HOMESTEAD TAX EXEMPTION:
Here are some recent Florida cases involving contested homestead tax exemptions that highlight important legal principles and outcomes:
Wells v. Vallier, 773 So. 2d 1197 (Fla. Dist. Ct. App. 2000): In this case, the Florida court addressed the issue of whether a homeowner could retain the homestead tax exemption despite having an out-of-state property. The court ruled that receiving or claiming a tax exemption in another state where permanent residency is required disqualifies the Florida property from the homestead exemption. This decision emphasizes the strict interpretation of Florida's homestead laws, especially regarding dual residency and tax benefits in other states
Crain v. Putnam, 687 So. 2d 1325 (Fla. Dist. Ct. App. 1997): This case involved the denial of a homestead exemption to a homeowner who had been in a vegetative state in a nursing home for several years. The court ruled in favor of the homeowner, stating that physical presence is not the sole determinant of homestead status. The court considered other factors, such as the homeowner's intent and the maintenance of personal belongings at the property, to conclude that the home remained the homeowner's permanent residence.
These cases illustrate how Florida courts interpret and enforce homestead tax exemptions, particularly concerning dual residency.
Conclusion
Florida's homestead tax exemption provides significant financial benefits to homeowners, including reduced property taxes and portability. Understanding how to declare your homestead, the benefits of the $50,000 exemption, and the portability provisions can help you maximize these advantages.