Short and Sweet. The Basics of Florida Homestead
What is my “Homestead”? Your Homestead is your home that you own (not rent) and live in as your permanent residence in Florida. You can only have ONE Homestead, and you have to own it as a natural person or in a trust where you are also the beneficiary of the trust.
Why do I care about “Homestead?” Because your Homestead is protected from most types of legal judgments and there are many ways in which it saves you money on your property taxes.
What are the property tax savings for my Homestead?
The Save Our Homes Act keeps the Assessed Value (the base value on which you pay taxes) from going up any more than 3% a year or CPI, whichever is LESS. So the Market Value (what your home would sell for) can go up rapidly, but your taxes won’t. So most people who have lived in their home for a long time are paying taxes on WAY less than their home is worth.
Portability allows you to take up to $500,000 of the savings you have accrued because of the Save Our Homes Act to another home in Florida, so long as you buy and move into that home and change your driver’s license to that address by the end of the year following the year in which you sell or relinquish homestead status on your previous homestead. Because the average property tax rate in Florida is about 2%, Portability can make as much as a $10,000 a year difference in your tax bill! ($500,000 x 2%). The formula to determine Portability is:
Portability = Market Value on Tax Roll – Assessed Value on Tax Roll.
Exemptions are subtracted from your Assessed Value to arrive at your Taxable Value, the value against which your tax rate is assessed. There is a basic “standard” exemption of a total of $50,000 (for all homes with a Market Value over $75,000), which saves you about $1,000 a year on your tax bill. BUT there are about 30 other exemptions! They can be hard to identify. They are in categories like Low Income, Veterans, Disabled Persons, Seniors, First Responders, Granny Flats, and Deployed Military. Portability acts just like an exemption.
How do I get Homestead? You must FILE for it at the County Property Appraiser’s office. The form to file is the Florida DR501. Portability is a SEPARATE filing. If you have accrued portability and you want to transfer it over to your new homestead you must file a Florida DR501T Form. You ESTABLISH your Homestead when you (1) purchase it, (2) move into it, and (3) change your driver’s license to that address. Once you Establish your Homestead then you can go down and file for it. It will go into effect the January 1st AFTER the date on which you ESTABLISH your Homestead. So if you establish your Homestead on March 22nd, 2016, you can go down and file for it and it will go into effect on January 1st, 2017. The LAST DATE FOR FILING HOMESTEAD is March 1st of the year following the year in which you ESTABLISH your Homestead. So in our example above, the last date to file would be March 1st, 2017.
I heard that a lot of people “mess up” their Homestead… what are some of the common “Gotchas”?
- Forgetting to file for Homestead. Believe it or not, about 30% of eligible Floridians forget and don’t file for it!
- Forgetting to file for Portability. Remember, it’s a SEPARATE filing. Way over half of Floridians who have portability to transfer forget to file for it.
- Not identifying and filing for exemptions that you were eligible for. For example, if a Florida homeowner has lived in their home for over 25 years, is over 65, has an income below about $30K a year, and their home has a market value of under $250K, then they are EXEMPT from paying property taxes! A large percentage of the people eligible for this exemption don’t know and don’t file for it.
- Failing to realize that their Market Value on the tax rolls is not keeping up with ACTUAL Market Value. Remember, Portability = Market Value – Assessed Value. So you want your Market Value to be as high as possible! Many people think that if their Market Value on the tax rolls is low that is saving them money but this is WRONG. You pay taxes on your ASSESSED VALUE, not your Market Value! If your Market Value on the tax rolls is lower than your actual Market Value you should contact your Property Appraiser and get it RAISED.
- Selling your home and not realizing that your Market Value was low or that you forgot to file for portability on your home. When you close, it wipes out the savings and it cannot be fixed after that!
What is a Homestead Check™ and why should I get one? If you think all of the above stuff is confusing then you’re right. A Homestead Check™ analyzes everything for you and tells you if there are any issues that you need to address with your Homestead filings or valuations. If you’re a new Homeowner, it explains to you what, where, and when you need to file, and it gives you all the necessary forms. It also comprehensively analyzes all of the available exemptions to see if there is one that you qualify for. If there’s a problem, your Homestead Check™ will explain it to you, tell you how much money it is costing you, and give you step by step instructions on how to fix it. A Homestead Check™ costs $100 and is pretty much instantaneous. If you get a Homestead Check™ then you also have access to our counseling center, the Homestead Counselors™ if you have any questions or need help. If something needs to be fixed and you don’t have time or don’t want to deal with it the Homestead Doctors™ can fix it for you on very affordable and reasonable terms. If you get a Homestead Check™ then you also qualify for Homestead Monitoring™ for only $75 a year. Remember, your eligibility for exemptions can change every year and your market valuation and assessed value definitely changes every year, so you must monitor your “homestead situation” on an annual basis or how else will you know if something gets out of line?
Can’t I just find out everything I need to know from the County Property Appraiser? Property Appraisers are officials who are elected every 4 years and don’t have to have any experience in this area or know much about it to be elected. They work on a slim budget and do the best that they can, but unfortunately it has proven time and time again to be a true statement to say “If you ask the Property Appraiser’s office a question, they will tell you whatever they think will make you go away the quickest.”