If you’re a homeowner or prospective buyer in Florida, you’re probably familiar with the State’s homestead exemption laws – and for good reason. The Florida homestead tax exemption is a powerful tool that reduces tax liabilities for homeowners across the State. But what exactly is this exemption, and how does it work?
This guide will help you leverage this exemption to minimize your tax obligations and enhance the benefits of owning a home in Florida.
What is Florida’s Homestead Exemption?
The Florida homestead exemption offers a property tax reduction, capped at a certain value, based on your home’s assessed worth. If you owned your property on January 1st of the tax year, you could lower the taxable value of your home by as much as $50,000 with the homestead tax exemption.
Benefits of Homestead Exemption Laws in Florida
Florida’s homestead laws are one of the many attractive aspects of living in Florida. Here are some benefits of these Laws:
1. Florida Save Our Homes Act
This law states that no matter how much the home’s market value rises, the taxable value of homestead properties in Florida cannot increase by more than 3% annually or the percentage change listed in the Consumer Price Index, whichever is lower. For this reason, a long-term resident of a Florida house often pays significantly less in taxes than what their home’s market value would generally require.
2. Portability
Portability is the difference between a property’s assessed value, which serves as the foundation for taxes, and its market value, which is the price at which it would sell in a free and open market. Since Florida property values have increased by 10% over the past ten years, portability has gained importance. Some homeowners wouldn’t have considered moving before portability because they didn’t want to give up their low tax bills. But now they can take the tax savings with them to their new residence (for up to a maximum benefit of $500,000).
3. Other Tax Exemptions
The typical homestead tax exemption of up to $50,000 is known to most individuals, but did you realize that there are approximately twenty different exemptions? There are exemptions for veterans with disabilities, those who constructed “granny flats” onto their homes, homeowners who were damaged by a hurricane or other disaster, older citizens, deployed service members, and a list of other exemptions.
Limitations for Property Owners
When it comes to homestead property, there are some complex issues that may come up. Furthermore, as the family home is the most valuable asset for the majority of us, these issues might have serious implications. Examples of issues that may arise when determining homestead tax exemption eligibility include:
- If you only spend a portion of the year residing on the land.
- If a portion of the house is rented out.
- If you have several buildings constructed on the same plot of land.
- If a trust holds title to the property.
- If you possess a remainder interest, enhanced life estate, life estate, half, or other fractional interest in the property.
- If you joined many plots and constructed your home on them.
- If you are temporarily residing elsewhere.
- If you purchase a new house and sell the previous one; or
- If an insurance-covered fire or other disaster destroys your home.
How to Qualify for Florida Homestead Protection?
To be eligible for Florida homestead protection, you must be a natural person who personally occupies the land and has a beneficial interest in it.
- Act Like a Natural Person
To be eligible for Florida homestead protection, you must be a resident of Florida.
Only natural individuals having a legal interest in the land are eligible for homestead protection. For a person to be eligible for Florida homestead protection, they must hold all or a portion of the property’s legal title.
- You Live on the Property Personally
A property cannot be eligible for homestead protection unless you live there and occupy it as our primary residence. At the very least, occupying means bringing your primary belongings into the house. Although you may possess numerous residences for personal use, only your primary residence is eligible for Florida homestead tax exemption and other homestead protections.
How Farshchian Law Can Help
At Farshchian Law, our goal is to provide a one-stop shop for your real estate and estate planning needs. Please contact Info@JFRealEstateLaw.com or call (800) 604-1871 or click here to schedule a free consultation with a Florida real estate and estate planning lawyer. We serve the entire State of Florida with real estate, probate, estate planning, and title/closing services.