Important dates and how the “Homestead World” Calendar works.
When to I have to file for Homestead? When is my Homestead Established? When does it go into effect? What if I want to challenge my Market Value? What if I need to file a VAB Petition?
Since having your Homestead filing go into effect saves you money, you generally want it to go into effect as soon as possible. However, there are circumstances when you WON’T want it to go into effect as soon as possible. When building a new home, you need to know how quickly you need to complete the home and get moved in so you don’t lose valuable portability savings that you accrued in your last home. There are also times when you MUST let go of your homestead status and filings or you can incur severe penalties. So a basic understanding of the important dates and the calendar in the Homestead World can be very helpful. This article will hopefully set you straight on the basics.
Here’s the basic overview: Your property taxes are an “ad-valorem” tax. That means that you pay the tax based on the value of what is being taxed. People can get a bit testy about that… remember the Boston Tea Party? So the Florida Dept. of Revenue controls the process- it is the same for all 67 Florida counties, and it follows a strict calendar. There is a date by which values must be determined, a date by which those values must be officially disclosed, a date by which you must file a challenge to those values, and then a date on which those values are “locked-in” and the tax bills sent out. Since the Homestead Laws offer a bunch of tax benefits, there’s a specific procedure that must be followed, specific requirements that must be met, and forms which must be filed by certain dates. You should also know… Since Homestead Status does confer a lot of benefits and savings, those who claim the benefits without being eligible for them are dealt with quite severely.
Here are the Specifics:
Florida Law says that on January 1st of each year the Property Appraiser for each county shall accurately determine the market value of all properties in the county. So JANUARY 1st is our first important date. Property Appraisers cannot actually go and visit each property in the county on January 1st and come up with a value, so they get a little help from computers. They use a Computer Aided Mass Appraisal System (CAMA) to determine the value. It sounds a bit silly, but they actually do hit a button on a computer on January 1st and it spits out however many thousands of values there are on however many thousands of homes there are in the county. Not surprisingly, this method is not perfect, and some of the values are off… many of them quite substantially. This was anticipated by the architects of the system and so they created a procedure by which those values are revealed, reviewed by the homeowner, and may be challenged. And what is “Market Value”? Sometimes called the “Just Value”, the Market Value is defined to be the price at which the home would sell in a free and open market, in a reasonable period of time, between a willing seller and a willing buyer. So it is SUPPOSED to be what your home would actually sell for. Florida law also allows the property appraiser to adjust the Market Value to account for the fact that when the property sells the owner doesn’t get 100% of the proceeds. There are costs. Florida law, therefore, allows the Property Appraiser to adjust the Market Value down by up to 15% to account for these “costs of sale.” That’s why people will often make the statement that your initial market value should be about 85% of what you paid for the property. This is a bit of an oversimplification but in a lot of cases, it’s fairly accurate.
The Property Appraiser officially discloses the values that he came up with on January 1st in a Truth in Millage Rate Notice (TRIM NOTICE) that is mailed out about the second week of August each year. So our SECOND important date is about the second week of August. The TRIM notice says “Hi! I’m your property appraiser for the county and on January 1st I came up with this market value for your property. If you don’t agree with the value that I came up with, please give me a call and we’ll talk about it. If us talking about it doesn’t solve things, then if you want to challenge my determination, then you must file a petition with the Value Adjustment Board by this date:_____________”
If you want to challenge the Property Appraiser’s determination of Market Value then you must file a Value Adjustment Board (VAB) Petition by 25 days from the date that TRIM Notices are mailed. That works out to be around Sept. 10th each year, and varies from county to county because they don’t all mail the TRIM notices on the same day. So our THIRD important date is “about” Sept. 10th of each year- the lasts date for filing a VAB Petition.
Except for any pending and unresolved VAB cases, the Tax Rolls are certified and all values are locked in on October 31st of each year. Tax bills are then mailed out and arrive about the first of November in the homeowner’s mailbox.
Your Homestead is ESTABLISHED when you purchase a homestead property, move into it, and change your drivers license to that address. Legally, it is established when you purchase the home and move into it and spend one night there with the intent to permanently remain there, as opposed to anywhere else. But how do you prove that? From a practical standpoint, for most people it means changing your drivers license to that address. For those who don’t have or want a driver’s license, they can file an Affidavit of Homestead in the public records to clearly establish that they have moved in and intend to permanently remain. It’s important that at this point you have 100% completely relinquished any and all other Homesteads anywhere else in the world. If not, you can get in lots of trouble.
You can FILE for Homestead by filing a DR501 Form with the County Property Appraiser’s office as soon as you have ESTABLISHED your Homestead. From a practical standpoint, the property appraiser knows that you have purchased the property when the deed is recorded in the public records. So you’ll have a hard time filing for homestead if your deed has not been recorded yet. These days, most closing agents electronically record the deeds which generally happens a day or two after closing so you can go down and file for your Homestead very quickly after purchasing your new home, so long as you’ve done the three things above to ESTABLISH your homestead.
Your Homestead will become effective on January 1st of the year FOLLOWING the year in which you ESTABLISHED your Homestead, SO LONG as you FILE for Homestead no later than March 1st of the year following the year in which you established your Homestead. So if you purchased your new home, moved in, and changed you driver’s license to that address by December 31st, 2018, so long as you FILE for Homestead by March 1st, 2019, you Homestead filing will be considered to have gone into effect on January 1st, 2019. So if you establish Homestead on January 2nd, 2018 you have until March 1st, 2019 to file, and your filing will go into effect on January 1st, 2019… got it?
If you have Portability to move from a prior homestead then you must establish your next Homestead by December 31st of the year following the year in which you sell or relinquish homestead status on your prior homestead. So if you sell your home on January 3rd, 2019, and you’re building a new house, you have until December 31st, 2020 to get that house finished, move into it, and change your driver’s license to the new address (thereby ESTABLISHING your new homestead) or you will lose your accrued portability savings. Note, if you sell your prior home on December 31st, 2018, then you have until December 31st, 2019 to get your next homestead established, which is a year. However, if you sell your prior home on January 2nd, 2019, then you have until Dec. 31st, 2020 to establish your next homestead, which is about 2 years. Many people oversimplify things by saying “You have to do it within 2 years”, which as you can see by the first example, can be off by almost a year. Many more people get even further confused (including many property appraiser staff) and somehow get it in their heads that if you forget to file for portability for more than 2 years after you filed homestead on your next home that you have forfeited the portability. This is NOT TRUE. As long as you moved from your prior home to the next home by the end of the following year, you are eligible to move your portability. Just because you then forget to file for it doesn’t take it away. It doesn’t matter if you forget for 1 year, 2 years, or 7 years… when you. Realize your mistake you can file for it and start getting the benefits of the portability from then on.
You claim any portability that you are moving over by filing the DR501T form with the county property appraiser’s office. To get it for that year, you must file the form by March 1st unless you convince them to allow a late filing. NOTE: It is a SEPARATE filing from the DR501 form for your Homestead filing.
What if I want to challenge the Market Value that the Property Appraiser came up with on January 1st? What are the important dates?
As stated further above in this article, the LAST DATE ON WHICH YOU CAN CHALLENGE THE PROPERTY APPRAISER’S MARKET VALUATION THAT HE CAME UP WITH ON JAN. 1 IS AROUND SEPT. 10TH. Officially, it’s 25 days from the date on which TRIM notices are mailed and that varies from about Sept. 10th to about Sept. 18th amongst the various Florida counties. After this date, you’ll have to wait until the NEXT year to challenge and the Market Valuation Date you’ll be challenging will be January 1st of that next year. So if you sell your house that calendar year and you haven’t filed your VAB Petition by Sept. 10th then sorry, you’re out of luck! ALSO, don’t forget that if you sell your home you will LOSE your right to the challenge unless you have an Addendum to your sales contract signed between you and the Buyer which assigns the right to the challenge after the closing to the Seller from the Buyer. The Florida Homestead Check Market Value Adjustment Addendum© works wonderfully for this purpose and is included via a link in each Homestead Check™.
It’s important to realize that if you want to challenge your market valuation that you may NOT want your new Homestead to go into effect right away. The benefits of waiting a bit and letting it go into effect the following year may hugely outweigh the benefits you get from it going into effect that year.
LET’S USE WHAT YOU HAVE LEARNED ABOVE TO WALK THROUGH AN EXAMPLE OF A CASE WHERE YOU WOULDN’T WANT YOUR HOMESTEAD FILING TO GO INTO EFFECT RIGHT AWAY!. Sam is selling his home. He put it on the market in August of 2018 and unfortunately his Realtor® didn’t advise him that there are important homestead-related things to check on and recommend that he get a Homestead Check™. So he didn’t realize that his Market Value was WAY low from what it should be and that this would cost him $200,000 in lost portability. In November, Sam found his perfect home and bought it, even though he had not yet sold his last home. In the process of buying the new home the title agent recommended that he get a Homestead Check™ and one of the questions that Sam was asked when he was getting the Homestead Check™ was “Do you still own a prior home”. He said yes, filled in the address, and lo and behold the Homestead Check™ came back and alerted Sam that his present home had a $200,000 market value error that if not fixed would rob him of that portability and cause his tax bill on his next home to go up about $4,000 a year! Sam was very upset and called the Homestead Counselors™ for help. The counselor advised Sam to take a deep breath and to make sure that he did not close on the sale of his prior home if he found a buyer or move out of it if he didn’t until after January 1st, 2019 (it was November when they had the conversation and Sam was actually about to go ahead and move his Homestead over). Sam was at first upset that since he wasn’t going to establish his new Homestead before Dec. 31st, 2018 that his homestead wouldn’t go into effect on Jan 1st, 2019, but rather Jan. 1 of 2020. The counselor explained that yes, Sam would be losing the benefit of having the Homestead exemption on his new home for 2019 but that would costs him around $1,000 because he wouldn’t get the $50,000 exemption, but that if he did so, that since he would be relinquishing his Homestead on his current home in 2018, and it was already after the last date for filing a VAB challenge (about Sept. 10th), that Sam would be giving up his ability to challenge the market valuation error. Sam was a bit peeved that his Realtor® had not told him about this when he listed his house, but put off moving into his new home for a few weeks and moved in the 5th of January, 2019. On January 1st, 2019 the Property Appraiser once again determined Sam’s Market Value on his home, and was still about $200,000 low. Since Sam had moved into his new house on January 5th, he changed his driver’s license to his new address and since he had now “Established” his new Homestead he went on down to the county property appraiser’s office and filed for Homestead on January 15th, 2019 on his new home, thereby relinquishing the Homestead on his prior home. As luck would have it, Sam finally found a buyer for his prior home in late January 2019 and they closed February 20th, 2019. BEFORE they closed Sam was sure to get a Market Value Adjustment Addendum© signed with the Buyer which assigned the right to continue the Market Value challenge after the closing to Sam. Sam ended up hiring the Homestead Doctors™ and they filed a VAB Petition for Sam before Sept. 10th, 2019. The petition was heard and Sam got his Market Value adjusted the $200,000 he was hoping for in October 2019. The change was retroactive back to January 1st, 2019. So now as of January 1st 2019 Sam’s Property Record Card now had a $200,000 higher Market Value, which meant he had $200,000 more in portability. When Sam’s homestead filing that he had made on January 15th, 2019 went into effect on January 1st, 2020, there was the extra portability of $200,000 which caused Sam’s tax bill that he received in November of 2020 to be $4,000 lower. Sam was a happy man. Even though he gave up the $1,000 savings he would have gotten by having Homestead effective on his new home in 2019, he saved $4,000 starting in 2020 and EVERY YEAR AFTER THAT!!
So this was an example of a case when you wouldn’t want your Homestead to go into effect as soon as possible! If you followed all of this then you have MASTERED the important Homestead dates and the “Homestead World” calendar! If not, and you are confused, just remember- GET A HOMESTEAD CHECK ™ EVERY YEAR- ESPECIALLY THE YEAR BEFORE YOU SELL YOUR HOME, AND YOU WILL BE PROTECTED FROM ANY LOSSES, AND YOU DON’T HAVE TO FIGURE ALL THIS OUT!