In Florida if you own a home you will become aware very quickly that one of the joys of homeownership is paying property taxes! We don’t have a state income tax in Florida so they do try to make up a bit of the revenue with property taxes which average around 2% of your home’s value statewide. That’s a significant amount of money, so you want to do whatever you can to keep your property taxes low! There are several things that you can do to keep your tax bill as low as possible.
TAX SAVING TIP #1: Make sure that your home’s initial valuation is as low as possible.
You cannot assume AT ALL that the tax bill paid on your new home by the prior owner is at all reflective of what your taxes will be in the future! The January 1 that follows your home purchase is a magic day. On that day the County Property Appraiser will push a button on a computer and ZING out will come your property’s FIRST valuation. You get officially notified of that value by a letter that comes about the second week of August called a TRIM notice. However, you can look on your county property appraiser’s website starting usually in February and see “working values” for your property. This gives you some indication of what they’re going to come up with. Your initial valuation SHOULD be about 85% of what you paid for your property. If your Assessed Value shows more than that to a significant degree, then you should say something! You can’t really “say anything” until you receive your TRIM notice in August because if you do, they’ll just say that everything is preliminary and to wait until it’s official when you get your TRIM notice. Once you do, be sure and note that on the TRIM notice it shows a date by which you lose your rights to say anything! See below on “Make any Necessary Adjustments” to see how to officially “say something” and get an erroneous value fixed.
TAX SAVING TIP #2: Be sure and file for Homestead Benefits!
Filing for Homestead provides lots of benefits. One is that your Assessed Value, which is the value on which your tax bill is based, can’t go up each year any more than the consumer price index or 3%, whichever is LESS. Although Florida’s real estate market may be RED HOT, and values may be skyrocketing, your tax bill won’t go up past the limit that Homestead protects for you! Homestead also allows you to receive EXEMPTIONS. Everyone whose home is worth more than $75,000 gets the “Standard” Exemption which is $50,000 and saves you about $1,000 a year on your tax bill (remember that the average tax rate is 2%.... so 2% x $50,000 = $1,000). However there are MANY OTHER exemptions that can be extremely valuable and you want to make sure that you receive any that you are eligible for. There are a couple dozen exemptions and they can be a bit tough to unearth so the easiest way to make sure that you carefully examine them all is to use Florida Homestead Check’s nifty product called a Homestead Check™ and it’ll walk you through all the exemptions. To file for Homestead you file the DR501 Form with your County’s Property Appraiser office. If you get a Homestead Check™ you’ll be provided with filing instructions and all necessary forms for the base filing and all exemptions that you are eligible for. If you’ve owned a home in Florida prior to this one you might have another valuable exemption called “Portability”. If so, you MUST FILE SEPARATELY for it by filing a Florida Form DR501T with the Property Appraiser’s office. Again, a Homestead Check™ will figure out whether you have portability or not and if so show you how to file for it.
TAX SAVING TIP #3: Get as much Portability as you can! It’s VERY valuable!
Basically, you build up Portability in your home as time goes by. Remember how if you file Homestead your tax bill can’t go up as much as the real estate market may be going up? That’s because the Homestead laws keep your Assessed Value, which is the basis on which you pay taxes, locked down. The difference in your Assessed Value and what the Market Value (what your home would sell for) is equals your Portability. You can “PORT’, or take with you, Portability from one home in Florida to the next. Portability maxes out at $500,000. So for those lucky folks in the “500K Club”, they have a Portability Exemption of $500,000, which means that they are paying about $10,000 a year LESS in taxes than they would otherwise! What a great benefit- right? So how do you get in the $500K Club? You PAY ATTENTION to your Assessed Value and your Market Value on the tax rolls. Most people think that they want their Market Value to be as low as possible but this is not at all true. You don’t pay taxes on your Market Value. You pay them on your Assessed Value. So having a Market Value on the tax rolls that is lower than you’re your home is actually worth is not going to save you money on taxes! Remember, under the Homestead laws your Assessed Value can’t go up more than 3% a year or CPI, whichever is less. Your portability = Market Value – Assessed Value, so you want your Market Value as HIGH as possible. The ways that the Property Appraiser valuation systems work are somewhat “biased” against Homestead property owners. It is quite often that homeowners will see that their Market Value is significantly less than what their home would sell for. In fact, it’s so common and prevalent that it’s become very common knowledge that “the tax value is always way below what the actual value is.” That’s not a good thing if you have filed for Homestead! If your Market Value is less than about 85% of what you know your home is really worth, then you should do something about it or you’ll have less Portability than you should. That means that if you sell your home and move to another home in Florida you won’t get as much portability as you should and your tax bill on your next home will be higher than it should. You can check this easily by using Florida Homestead Check’s FREE PORTABILTY CHECKER. The bottom line is, AS SOON AS YOU THINK YOU MIGHT BE SELLING YOUR HOME YOU BETTER CHECK ON YOUR PORTABILITY AND IF IT’S OFF YOU BETTER READ BELOW ON WHAT TO DO! If you sell your home without fixing it then your savings are permanently lost.
TAX SAVING TIP #4: If something is wrong GET IT FIXED!
If you forgot to file something then in general you can call the Property Appraiser’s office and they’ll help you with getting it filed. However, if you need an adjustment to a value, whether it’s because your initial assessment was too high or because your Market Value is too low and it’s keeping you from getting as much portability as you should have, it’s unlikely that the Property Appraiser’s office is going to be very helpful. The simple reason is that you are going to create work for them, and they don’t like that. Once in a while they will be knowledgeable and helpful and it’ll all go fine, but most of the time we find that not to be the case. What most people get when they call is a bunch of misinformation designed to get you to give up and leave them alone. Would you call the IRS and ask them how to save money on your taxes? Property Appraisers are elected officials. Sometimes they have lots of experience and training, and sometimes they don’t. Very often the “lady or man who I spoke with at the property appraiser’s office” (we hear this every day) will not give you the most accurate information. We KNOW, because again…we see it every day. So don’t let them tell you that there is nothing that you can do, that they “don’t make these types of adjustments”, or the myriad of other things we hear to try to get people off the phone and to give up. Florida’s laws prescribe a very specific path for getting things fixed, and if you follow that path it’s very easy and works nearly 100% of the time. If you don’t feel like dealing with it yourself Florida Homestead Check will handle it all for you. We do so on a contingency fee basis, meaning we don’t get paid unless we get the adjustment and corresponding savings that we identify in a Homestead Check™.
If you are a true do-it-your-selfer, then click HERE to go to a separate article on how to navigate through the process. It starts by getting a Homestead Check™ which will tell you in detail what you need to do. It’ll even give you easy-to-understand videos for every step of the process. However…. We will warn you. It is like baking a cake. You MUST follow the directions or your cake will not be very good. You CANNOT solve this issue by calling up the property appraiser and just complaining and telling them that you want an adjustment. They’ll be rid of you in no time, and you’ll end up paying the extra taxes. If you would like for Florida Homestead Check to help you, just click here to get a Homestead Check™, which will first verify that you really do have a problem, and then will connect you with our support team to help you. A full analysis, report, and consultation is included in the price.
This article has given you the basics of the basics. As you can imagine, property tax issues can get pretty complicated. About all we can PROMISE you is that if you get a Homestead Check™ at a minimum BEFORE you buy your home and the year BEFORE you sell it, we’ll make sure you don’t lose money on property tax savings. We have made it very easy and affordable- a Homestead Check™ only costs $175 and gives you a full report, analysis, and consultation. Can you imagine how much that would cost with a tax lawyer or other tax specialist? A Florida real estate attorney invented the Homestead Check™ to make great tax advice and help available to everyone for an affordable price, and we hope that you’ll use it!