Is your Market Value on the Tax Rolls about what your home is actually worth?
Do this simple test: Multiply your best estimate of the actual value of your home by 85%. Compare that to the Market Value (sometimes called the “Just Value” of your home on the Property Record Card for your home on the County Property Appraiser’s website. What should you use for the estimate of the actual value of your home? You have to ask yourself, “what would my home realistically sell for in a free and open market in a reasonable period of time?” If your home is under contract to sell, the contract price is an excellent estimate of its market value since someone has actually offered to pay you that! IF 85% of your estimated market value for your home is more than $25,000 below the market (or just) value on the tax rolls, then you should consider taking action to have it fixed. If you DON’T, then just know that your portability savings are reduced by the amount of the error, and that will raise the property tax bill on your next home by about 2% of the error. So the $25K error mentioned above will raise the tax bill on your next home by about $500 a year more than it need be.
There are two caveats to the above:
The maximum amount of portability that you can have is $500,000. If you already have $500,000 in portability then if your market value is low on the tax rolls then it doesn’t matter.
If you move from a home with the same or higher market value on the tax rolls as the one you left, then you can take 100% of the portability that you have. However, if you move into a home with a lower market value on the tax rolls than the one that you left, then you get whatever portability you had, multiplied by the ratio of the two. So if you go from a $500,000 home to a $300,000 home, and you had $100,000 in portability, then you’ll get 3/5ths of the $100,000 = $60,000 in portability on the next home.
Did you forget to file for Portability on the home that you are about to sell?
It is quite often that someone sells their home, buys their next home, remembers to file for homestead on their new home, but doesn’t realize that portability is a separate filing and forgets to file for it. In that case, whatever portability that they had is unclaimed. It sits there unclaimed until it is claimed, UNLESS you don’t claim it by the time you sell your current home, in which case it is wiped out permanently!
So let’s say you sold your last home 4 years ago and bought your current home a month later. You went down and filed for Homestead but you didn’t file for portability. Let’s say that the home that you sold had $100,000 in portability (the difference in your Market Value on the tax rolls and the Assessed Value on the tax rolls as of the year of your sale). So now you’re getting ready to sell your current home and your Realtor® mentions that it’s a good idea to get a Homestead Check™ when selling your home. She just did you a huge favor because your Homestead Check™ will tell you that you forgot to file for portability and what you need to do. Now you can run down to the Property Appraiser’s office and file for portability by filing a DR501T form and PULL that unclaimed portability into your current home so that it can be PASSED forward to your next home! If you hadn’t been saved by your Realtor® recommending that you get a Homestead Check™ then once you closed on the sale of your current home, that $100,000 in portability would have been lost permanently and your property tax bill on your next home would have been about $2,000 a year higher EVERY YEAR, for the rest of your days in Florida!
What if you check on these things and there’s a problem? How do you fix it?
Market Value Errors
Fixing a Market Value error will generally require that you start by getting an appraisal with a valuation date of January 1st of the current year. That appraisal is your evidence to the county property appraiser that their valuation was in error. They are required by law to give you an “informal conference” and consider your evidence. If they refuse to make an adjustment, then by about Sept. 10th (it varies a bit from county to county) you MUST file a Value Adjustment Board Petition and ask them to overrule the County Property Appraiser. Believe it or not, VAB boards are here to help you. They know that the Computer-Aided Mass Appraisal Systems (CAMA) used by the county property appraisers aren’t perfect and can make errors. If you fail to file a VAB petition by the (around) Sept. 10th date then if you sell your house that calendar year your ability to fix the error is lost. ANOTHER IMPORTANT NOTE: If you sell your home before the process of fixing the error is complete you will LOSE your rights to continue the challenge UNLESS you get a Market Value Adjustment Addendum© or similar addendum signed by you and the Buyer of your home BEFORE the sale occurs.
If you get a Homestead Check™ it will tell you step by step instructions for fixing a market valuation error. However, you MUST REALIZE it is like baking a cake. You may have never baked a cake, but if you get a recipe and follow it precisely, then you’ll end up with a nice cake. If you don’t follow the directions accurately, you won’t. So you can’t just call the property appraiser and yell at them. That won’t work. They will tell you whatever will make you go away the quickest. It’s not in their interest to help you. Although at Florida Homestead Check we want everyone to be able to fix issues themselves it can be a little bit of a challenge for a layperson to successfully navigate the procedure for fixing market value. The Homestead Doctors™ are available to help you. We will fix market value errors at no fee to you unless or until we actually get the savings for you, and whatever they end up being, we’ll split them 50/50 with you for your first year of savings, and the rest is yours! Whether you fix the issue yourself or use the Homestead Doctors™, you DO have to pay the cost of the above-mentioned appraisal, which is usually about $400.
Forgot to File for Portability
Fortunately, fixing this error is much easier than fixing a market value error. All that is necessary is to go to your county property appraiser’s office and file a Form DR501T to claim your portability. However, there are THREE THINGS TO BEWARE OF:
Many County Property Appraisers have poorly trained staff that will tell you that if it has been more than 2 years since you filed for homestead on your home that your portability has been lost. This is NOT TRUE. Ask for a supervisor if they tell you this. So long as you established your next homestead by the last day of the year following the year in which you sold your former home, you are eligible to claim the portability. It doesn’t matter if you forgot for 2, 3, 5, or 8 years.
If it is during January or February, then when you file the DR501T form the transfer of the portability will be effective THAT calendar year. You NEED it to be effective that calendar year if you are selling your home that calendar year. The last date for “on time” filing of the form is March 1st. If it is AFTER March 1st the person at the property appraiser’s office will probably smile at you and tell you “no problem, it’s all taken care of.” That will lead you to think that since they accepted the form that you are all good. However, what they are not telling you is that since you gave them the form after March 1st they will make the filing effective NEXT year! So if you sell your home THIS year, then you’ll lose your unclaimed portability. You MUST make it clear to them that even though you are filing the form late, that you need it to be effective THAT calendar year. Since the portability filing is considered to “piggy back” on the basic homestead filing, so long as you remember to file for homestead and that filing is in place they will USUALLY grant late filing and make it effective that year. If they don’t, you can file a VAB petition in the same manner as for a market value adjustment above and have them overruled. You must just demonstrate “particular extenuating circumstances” to justify the late filing. However, EVERYTHING HAS ITS LIMITS. If you don’t file the form by Oct. 31st then you will not be able to get the filing accepted for that year, even if the property appraiser plays nice. If you don’t file the form by about Sept. 10th (it varies from county to county), and they don’t want to play nice and grant your late filing request, then it’s too late to get the VAB to overrule them.
If you get a Homestead Check™ and you have this problem, it will tell you exact step-by-step instructions and videos to walk you through all this. The Homestead Counselors™ and Homestead Doctors™ will also be available to help you.