1. If you get sued they can't take your Homestead.

Your Homestead Property is protected from legal judgments like personal injury lawsuits. However, that doesn’t mean that you can just stop paying on your mortgage and they can’t take your house. It also doesn’t mean that you don’t have to pay the guys that just put in your new air conditioning system. When you agree to a mortgage or to work being done on your house Florida law will allow the mortgage company or those workers to place a lien and eventually foreclose on it if you don’t pay. Your Homestead is also generally exempt in a bankruptcy proceeding, but again, your Mortgage company’s rights will be preserved even in that situation.

2. If your home’s value goes up you can’t get taxed out of your house.

Believe it or not, this basic premise of Homestead Law originated in California, and migrated to Florida. Long ago, there was a grandmother living happily in her house where she had lived for 30 years when a bunch of movie stars discovered the neighborhood and made her home’s value go up from $150,000 to $2,000,000 in 4 years (this is just an example)! All of a sudden Grandma had a $40,000 annual tax bill. Although she could sell her home and drive off in her 1965 Ford with $2,000,000 in the trunk, she didn’t want to move, but on her Social security income she certainly couldn’t afford to pay $40,000 a year in taxes! So everyone felt sorry for Grandma and a law got passed that basically said “You can’t tax people out of their homes because their value went up. She only should have to pay taxes on about what she paid for her home and she can stay there as long as she likes but when she sells and leaves, then the new owner will get the big increased tax bill.” These type laws often were called “Save our Homes” laws, and in 1995 Florida passed the same thing as an amendment to our State Constitution. In Florida, the January 1 st after you buy a home the property appraiser will make an initial assessment of the Market Value of your home. For this first assessment, your Market Value is ALSO your Assessed Value. After this, as time goes on your Market Value may go up with whatever the market does, but your Assessed Value, on which you pay most components of your tax bill, cannot go up more than 3% a year, or the Consumer Price Index, whichever is LESS. So Grandma can buy her house for $150,000, and then if all the movie stars move in a few years later and cause her Market Value to go to $2,000,000, then she can rock in her rocking chair on the porch blissfully, knowing that her tax bill will still be based on about the $150,000 that she paid for her house! Now, one last very important thing for you to understand here: Remember that your Market Value can go up however much the market goes up? And your Assessed Value stays “locked down” and can only go up 3% or CPI each year, whichever is less? Well, this means that hopefully as time goes on a gap forms between your (hopefully) skyrocketing Market Value and your Assessed Value, and that gap is what we call your Homestead Savings™!

3. If you want to move to another home in Florida, and you have accrued lots of Homestead Savings™, you can take them to your next home up to a maximum of $500,000.

So let’s go back to our example with Grandma. She bought her house for $150,000, and so her initial Market Value and Assessed Value were therefore about that amount. As the years went by, her Market Value kept going up and up, but her Assessed Value crept up slowly at around 2%-3% a year (most of the time in recent history CPI has been lower than 3%). After 10 years, Grandma’s house value went past $750,000. Everyone in the family thought it was cool that Grandma lived near the beach, but it was getting old with all the kids having to come over and do all the maintenance on that beach house. Everyone started talking about how it might make more sense for Grandma to move to a nice condo in a really beautiful assisted living community since she was now another 10 years older and having a little trouble getting around. About that time though, one of the kids, who was good at math said “Wait a second! Her property tax bill is only about $2,000 a year, and that condo we are talking about her buying is $800,000! Sure we can sell her house for $750,000, and it’ll only be another $50,000 to buy the condo, but then she’s going to have a tax bill of about $15,000 a year!” So since that would wipe out most of Grandma’s social security income everyone sighed and Grandma had to stay in the beach house. But one day, some smart legislators came along and said “This is stupid. If we let Grandma move to the condo then her beach house gets sold and the new person who buys it for $750,000 will be paying $15,000 a year in taxes on it, and they will probably spend a bunch of money to fix it up. Also if she sells then she’ll buy the $800,000 condo and the Realtors will make commissions, the construction people working on the new house get to earn some money, it’ll be way better for the economy!” And those smart legislators passed a law that said “OK, Grandma can take her Homestead Savings™ with her to her next house in Florida so long as she does it within a reasonable period of time, and we aren’t going to give her the whole $600,000 ($750,000 Market Value - $150,000 Assessed Value), we are going to cap it at $500,000 so we make out with a little extra on these deals. And thus was born what we in Florida call “Portability.” The Portability laws were passed in 2008 and since then when you sell a Homestead Property in Florida you can take up to $500,000 of your Homestead Savings with you two your next home in Florida. However, there are 2 catches: (1) you have to establish your new Homestead within 2 tax years of when you sell or relinquish your prior Homestead, and (2) if you don’t buy another home with the same or higher Market Value as the one you sold/relinquished, then you don’t get all of the Homestead Savings, you get a percentage equal to the ratio of the prior and the new home. So, two quick examples to help with the two “catches”: (1) If you sold your home in 2017, and you bought your new home and moved in around April, 2018, you have to buy and move into your homestead by the end of the year following the year in which you sell your present homestead or relinquish its homestead status (for example if you let it become a rental priority). (2) You sell your prior home which has a Market Value of $800,000, and your Assessed Value was $400,000. So you have $400,000 in Homestead Savings. You buy a new home in Florida that has a Market Value of $700,000. Assuming you are within the required timeframes for Portability, you will be able to move over your $400,000 in Homestead Savings, but it gets multiplied by the ratio of the new home’s Market Value to the prior Home’s Market Value ($700,000/$800,000) so you only get $350,000 in Homestead Savings™ on the new home. This means that in addition to any other applicable exemptions on your new home, you can subtract $350,000 from the new home’s Market Value in determining the Assessed Value on which you will pay taxes.

4. When you file for Homestead, there are many different “Exemptions” that you may be eligible for which will save you additional taxes.

An “Exemption” is an amount of money which you can subtract from your Assessed Value on which you pay taxes. Assessed Value – Exemptions = Tax Assessed Value. One of the most common exemptions is referred to quite often as the “Standard Exemption”. So long as your home has a Market Value of at least $75,000, you get $50,000 off of the Assessed Value. So via the “Standard Exemption”, a person with an initial Assessed Value of $75,000 will be paying property taxes for most components of their tax bill only on $25,000. There are many other exemptions. There are exemptions for senior citizens, disabled persons, veterans, the blind, widows/widowers, low income senior citizens, wheelchair-bound persons, spouses of deceased disabled veterans and first responders killed in the line-of-duty, and active-duty deployed military folks. The list of exemptions is VERY long, and finding them can be a bit of a treasure hunt. One of the tough things is that since your age changes year to year, and your income can change year to year, and other factors can also change, your eligibility for exemptions can change on a yearly basis. The only comprehensive way to know whether or not you are eligible for an exemption in Florida is to get a Homestead Check™.

5. You must file for Homestead by March 1st of the year after which you establish your Homestead.

You “establish” your Homestead after you have completed the purchase of your home and you have moved in with the intent to permanently remain. In general, you must have changed your driver’s license to your new home address. If you reside part of the year out of state, you must reside in your home in Florida at least 183 days a year for it to be your Homestead. One note: the LAST date on which you can establish your Homestead and file for it THAT year is January 1st . So if you establish your Homestead on January 1st, 2016, then so long as you file for it by March 1st, 2016 you will get Homestead for the tax year 2016. If you establish your Homestead on January 2nd , 2016, then you will have until March 1st 2017 to file, and your Homestead will be considered in effect for the tax year 2018. Homestead is always considered effective on January 1 st for the year in which it goes into effect.

6. What if I miss the March 1st filing date?

If you can demonstrate “Particular Extenuating Circumstances” to the Property Appraiser, they have the right to accept a late filing up until 25 days from the date on which Truth in Millage Rate (TRIM) notices are mailed, which is usually around September 10th

7. Where do I file?

You file for Homestead by filing a DR501 Form with your county Property Appraiser. If you are eligible for Portability then you must also file the DR501T form. Please note, you don’t automatically get Portability- you have to file the separate form! Many counties allow online filing but if you take advantage of this BE SURE that you follow up and call the Property Appraiser’s office to make sure that they received and processed your application.

8. Do I have to file every year?

No. You only file once after you establish your Homestead. You will get a card in the mail every year from your Property Appraiser which asks you to notify them if your property is no longer your Homestead. There are very large penalties for claiming Homestead on a property which is not actually such.

9. What are the most common mistakes that people make regarding the Homestead Laws?

A. Forgetting altogether to file for Homestead.

If you forget, you’ll lose out on the $50,000 “Standard Exemption” which adds about $1,000 a year to your tax bill, plus any other exemptions you would have been eligible for, and then your Assessed Value on which you pay taxes can go up as much as 10% a year instead of being locked down by the 3% or CPI “Save our Homes” cap.

B. Forgetting to ask for and file for Portability.

Since you could have as much as $500,000 in Homestead Savings™ to move to your new home, this could cost you as much as $10,000 a year in extra taxes!

C. Missing an exemption for which you are eligible.

Remember, you may not be eligible for an exemption one year, but then you could become eligible the next year. Some exemptions completely exempt you from having to pay Property Tax!

D. Having an Inaccurate Market Value.

Each year when you get your Truth In Millage Rate Notice (TRIM) it will basically say “We have determined your Market Value as of Jan. 1st to be $X…. if you disagree with this, you must notify us by …. (date)”. Most people think when they get their TRIM Notice that if they look at it and see that the Property Appraiser’s Market Value is substantially lower than what they know their home to be worth that they are getting away with something. This is actually NOT the case. You want your Market Value to be accurate because remember, your Homestead Savings™ = Market Value – Assessed Value. So the higher your Market Value the better until you get to the $500,000 maximum portability amount.

10. Had Enough? Confused? Tired?- Get a Homestead Check™

Some people are do-it-yourselfers, and others would rather not worry about learning and keeping up with all of Florida’s complicated Property Tax laws. For them, we offer a Homestead Check™. For a very minor cost, you can put it all on us! It’s easy- you just give us some basic information about yourself and your home, and shortly you will get back a Homestead Check™ that will tell you whether or not you are maximizing your Homestead Savings™. If not, we’ll tell you what the problems are and give you step-by-step instructions on how to fix them. Each step has a short video that you can click on for further explanation, and if after all that you need more help, you can purchase a Counseling Session from the Homestead Counselors™ and one of our experts will walk you through your situation and questions. If you don’t want to fix the issues we have identified yourself, then the Homestead Doctors™ will step in and do it for you for a very reasonable cost. We even have our own statewide appraisal network! Buying a Homestead Check™ also gives you access to the Homestead University™, which is packed with lots of detailed information and instructional videos, so you can learn everything you ever wanted (or didn’t) want to know about Florida’s Homestead laws!