We encourage any Floridian homeowner who has any intentions of selling their home now or in the future and who plans to stay in Florida when they buy their next home to carefully check and make sure preferably THE YEAR BEFORE they sell their home to get their Market Value on the tax rolls adjusted as HIGH as possible BEFORE selling their home. After the home is sold it is TOO LATE to make an adjustment. There is a common misperception that raising the Market Value of your home will increase your tax bill. This is NOT true.
Florida’s property tax laws are very generous to homeowners in our lovely State but unfortunately, they are also very complicated. This article’s purpose is to give you a basic understanding of the nuts and bolts of how these laws work. To have an understanding of Florida’s property tax laws you must learn these three different values on your county property tax rolls:
Market Value: The Market Value of your property is SUPPOSED to be the value at which your home would sell for in a free and open market between a willing buyer and a willing seller in a free and open market, in a reasonable period of time. "Willing Buyer and Willing Seller” means that short sales and foreclosure sales aren’t considered to be indicative of Market Value. Your Market Value is determined every year on JANUARY 1st by your county’s property appraiser. To determine Market Value your county property appraiser uses a Computer Aided Mass Appraisal (or “CAMA”) system which looks at comparable sales and attempts to come up with an accurate market value without the need for human intervention in most cases.
Assessed Value: Assessed Value on the tax rolls is the “base value” off of which you pay taxes. In Florida, it is necessary to have such a thing as “Assessed Value” because of the Save Our Homes Act, which is further explained below. The definition of Assessed Value is the Market Value as adjusted by the Save Our Homes Act.
Taxable Value: Taxable Value is the value against which your tax rate is multiplied to determine your tax bill. It is your Assessed Value, less any tax exemptions that you are eligible for. Most homeowners are familiar with the “standard” $25,000 exemption and the additional $25,000 “Homestead Banding” exemption, but there are also about 30 other exemptions!
Once you have down the three above definitions, it’s time to talk about two very important aspects of Florida’s “Homestead” related property tax laws- the Save Our Homes Act and Portability.
Important "Homestead" Related Laws in Florida
The Florida Save Our Homes Act. In 1992 the Florida Legislature passed this Act, which basically prevents the Assessed Value of a homesteaded property from going up more than 3% a year or the Consumer Price Index (“CPI”), whichever is less. When a property is purchased and homesteaded, on the first January 1 after that the Market Value will be determined for the first time. On this first valuation date, the Market Value and the Assessed Value will start out the same. As the years go on, the hope is that your Market Value will go up, but the Save Our Homes Act will limit increases in your Assessed Value to no more than 3% a year or CPI, and as such, a gap will form between Market Value and the Assessed Value. The “gap”, or difference between your Market Value and your Assessed Value is known as your “Homestead Savings™”, “portability savings”, or “cap differential”. The idea behind the Save Our Homes Act was that it’s not fair for people to be “taxed out of their homes” due to increasing Market Value.
Portability. In 2008 the Florida Legislature passed the “portability” laws. Before Portability was passed, people would sometimes be hesitant to move from their homes because they didn’t want to lose the cap savings from the Save Our Homes Act and incur a higher tax bill for the same value home. The portability laws basically say that you can take up to $500,000 of your Homestead Savings™ with you from one Florida homestead property to another. Those Homestead Savings™ act as an exemption that comes off of your Assessed Value, thereby lowering your Tax Assessed Value and therefore your property tax bill. So the bottom line is that you want to accrue as much portability as possible so that you can take it with you to your next Florida home. Theoretically, under the portability laws, if you sold a $500,000 homestead and then moved to another $500,000 homestead in Florida your tax bill would not change other than just for any change in the tax rates between your present and subsequent homestead (for example, St. Augustine has about a 2.7% tax rate and the Keys only have about a 1.4% tax rate). One last note on portability: In order to be able to transfer your Homestead Savings™ from your prior home to your next Florida home, you must establish your next homestead by the end of the year following the year in which you sell or relinquish your present homestead property. So if you sell your present home on June 17th, 2020, then you must establish your homestead on your next Florida home by Dec. 31st, 2021. “Establishing” homestead means that you have purchased your next Florida home and moved into it, with the intention of permanently remaining. From a practical perspective, this means that you have changed your driver’s license to the new address. If you don’t establish your next homestead within the required timeframe, you will FORFEIT your portability savings and you will have to start all over building it up again. Portability requires a SEPARATE filing from your basic Homestead Filing and many people forget to make the separate filing. However, if you forget, once you remember, you can file for it and start getting it. It doesn’t matter if you forget for 2, 3, 4 or however many years. Once you remember you can file for portability and start getting the savings going forward. You won’t get them for the years you forgot, it’s not retroactive. There is a common misperception that if you forget to file for Portability for more than 2 years then you lose it. This is NOT true. Warning: Many county property appraiser staff do not understand this and will give you wrong advice on this subject.
So, a quick review: Homestead Savings™ = Market Value – Assessed Value
Therefore, the HIGHER Market Value the HIGHER your Portability. And therein lies the problem. The way that the county property appraiser’s CAMA systems are designed, it is quite often that your Market Value on the tax rolls may be substantially less than what you know your actual Market Value to be. The result is that you have LESS portability than you should if this is the case, and you must get your Market Value adjusted to an accurate value BEFORE you sell your home, or the error will be locked in and you will receive less portability.
Most Homeowners are familiar with Truth In Millage Rate (or “TRIM”) notices. This is a letter that you receive about the second week of August each year that is the county property appraiser’s official notification to you of what he determined your Market Value to be on January 1st of that year. Most Homeowners open their TRIM notices and chuckle when they see that their Market Value as reported by the property appraiser is substantially less than they know it to actually be. They think that they are getting away with something but this is WRONG. They are going to be robbed of valuable portability savings if they sell their homestead without correcting this error. Why do most homeowners think that they would NOT want to raise their Market Value on the tax rolls? Because they think that would raise their property tax bill. WRONG. We do not pay taxes on our Market Value, we pay taxes based on our ASSESSED VALUE, which is held down by the Save Our Homes Act.
So raising your Market Value can ONLY help you. In any year that Market Values increase, you can rest assured that the county property appraiser looks to see what CPI was and he raises your Assessed Value by CPI or 3%, whichever is less. He will do this so long as the Market Value for your home has increased by at least CPI or 3% (whichever is less). Therefore, if you see that your Market Value on the tax rolls is less than what your home is worth, then you want to reply to your TRIM notice and ask to have your Market Value RAISED to an accurate value- this will increase your Homestead Savings™ so that your tax bill on your next home will be lowered accordingly!
The Procedure For Raising Market Value
If you need to raise your Market Value then there is a particular procedure that must be followed. You can’t just call up and yell at the property appraiser. And remember, an unfortunate truth is that most of the time if you call up your county property appraiser and ask questions about something, they will generally tell you whatever will make you go away the quickest! The Florida Dept. of Revenue prescribes the procedure for fixing Market Value and it’s the same for all 67 Florida counties. And remember, if you want your Market Value fixed for this calendar year, you MUST file a Value Adjustment Board petition no later than 25 days from the date that your TRIM notice was mailed. This date works out to be between about Sept. 10th and Sept. 18th each year, depending on what county you are in. So if you miss the Sept.10th-18th date, and you sell your house that year, you will not be able to get your Market Value adjusted and you will lose any Homestead Savings that you may have been able to get by correcting the error.
Do you want to see if you have a Market Value issue? The first step is to get a comprehensive property tax analysis, which we call a “Homestead Check™”. Just click HERE to start. Your Homestead Check™ will check your Market Value for accuracy and will also check three other very important things that can cause your tax bill to be higher. It will tell you whether or not you have an issue and if so, it will tell you how much money it is or will cost you per year if it’s not fixed and will give you step-by-step instructions on how to fix the problem. Remember, it’s like baking a cake- if you want a good outcome then you must FOLLOW THE DIRECTIONS CAREFULLY. If you wing it you will probably not have a good outcome. Not into baking cakes or following directions? The Homestead Doctors™ are trained specialists that know how to precisely navigate the process of obtaining a Market Value Adjustment for you. There are no fees to us unless and until we get your savings. When we do, we split the first year of them with you 50/50 and everything else is yours to enjoy, for all your additional years in your next Florida home! The only thing that you have to pay for up front is an appraisal of your home with an effective Market Valuation date of January 1st of the applicable tax year. The appraisal must come from an appraiser who agrees to go and testify for you at a VAB hearing if necessary. We have a network of over 200 appraisers across Florida who have agreed to be very reasonable in their pricing, efficient in their delivery, and who will testify for you at the VAB hearing if needed for a very reasonable fee. Most appraisals for homes under $1MM are $400, with homes in SE Florida being slightly more.
About The Author
A quick word about the author. Blake is a graduate Magna Cum Laude of North Carolina State University with a degree in Mechanical Engineering and of the University of Florida Levin College of Law with honors. He has spent an enormous amount of time studying Florida’s property tax laws and is the founder and CEO of Florida Homestead Check, LLC. He has handled many Value Adjustment Board petitions for clients seeking tax value adjustments and over 10,000 residential closings in his 24 years of law practice.