How to Transfer Your Tax Savings to A New Home

Sunny beaches, warm weather, and welcoming communities attract thousands of Americans to Florida every year… but many people also choose the Sunshine State for its various financial benefits. The most common benefit is no state income tax! However, did you know that those who choose to make Florida their primary residence can also benefit from real estate tax reductions? Let’s dive in with this video.

Benefits of Homestead Exemptions 

1. Property Tax Savings: Florida’s Homestead Exemption can exempt up to $50,000 of a home’s assessed value from property taxes, which generally correlates to a  $400-$500 annual savings. However, the most significant benefit of the Homestead Exemption is the Save Our Homes Act, which limits the annual increase of the assessed value of a homesteaded property to 3%, or the increase in the National Consumer Price Index - whichever is lower. This means that the longer you are homesteaded, the more you will save. 
   
   

2. Protection for Long-Time Homeowners: The Save Our Homes Act is especially beneficial for long-time homeowners who have owned their homestead property for a number of years. By limiting increases in assessed value, the act helps to protect these homeowners from sudden and significant increases in property taxes. 
   
   

3. Transfer of Property to Surviving Spouse: In the event of a homeowner’s death, the Homestead Exemption can provide for the transfer of the property to the surviving spouse. This transfer can occur automatically, without the need for probate or additional legal proceedings. Florida offers an additional tax exemption for widows and widowers of $5,000.

Other Category Exemptions Include:

• Blind person or permanently disabled
  
  
• People over 65 on a fixed income
  
  
• Honorably discharged ex-service member partially disabled
  
  
• Disabled vets and spouse
  
  
• Home of a quadriplegic (full exemption)
  
  
• Surviving spouse of first responder who died in line of duty (full exemption)

What is Homestead Portability?

Homestead portability refers to the ability to transfer accrued Save Our Homes (SOH) benefits from one homestead property to another. When a homeowner purchases a new homestead property in Florida, they may be able to transfer their SOH benefits from their previous homestead property to the new one. This can result in significant savings on property taxes, especially if the homeowner has owned their previous property for a long time and has accrued significant SOH benefits. This can also make it easier for retirees to move to a more affordable property, while still being able to take advantage of the SOH benefits they have accrued over time.

Homestead portability also applies to Florida homeowners who want to upgrade their properties. A homeowner who has owned a smaller homestead property for many years may be able to transfer their SOH benefits to a larger property with more amenities, without having to pay significantly higher property taxes.

How to Qualify for Homestead Exemptions in Florida

To qualify for the Homestead Exemption in Florida, you must meet the following criteria:

1. Ownership: You must be the legal owner of the property.
   
   
2. Residency: You must occupy the property as your primary residence as of January 1 of a given year.
   
   
3. Deadline: You must apply for the Homestead Exemption by March 1st of the tax year for which you are seeking exemption. 
   
   
4. Documentation: You must provide documentation to prove ownership and residency, such as a property deed or voter registration card and your Florida driver’s license. 

How to Apply for Homestead Exemption in Florida

To apply for the Homestead Exemption in Florida, follow these steps:

1. Obtain the Application: Contact your county property appraiser's office to obtain the Homestead Exemption application form.
    
   • For Charlotte County
     
     
   • For Lee County
     
     
2. Provide Documentation: Gather the required documentation to prove ownership and residency, as outlined on the application form.
   
   
3. Submit the Application: Submit the completed application and documentation to your county property appraiser's office by the March 1st deadline. *You must be a resident as of January 1st of the given year.

What is the Save Our Homes Act?

In 1992, the Florida constitution underwent an amendment that aimed to limit real estate taxation on homestead properties in the state. This provision was introduced to protect Florida residents from being priced out of their homes due to skyrocketing market values and the resulting increase in real estate taxes. 

The Save Our Homes amendment, as it is commonly referred to, came into effect in 1993 and imposed restrictions on the annual increase of assessed value for homestead properties. The increase was limited to the lesser of 3% of the prior year's assessed value or the percentage change in the Consumer Price Index.

These exemptions have helped thousands of Florida homeowners save money on their property taxes every year. If you are considering changing your residence in Florida, be sure to check out page two of your most recent TRIM notice, which captures your accumulated savings, or consult with a real estate professional or tax advisor to determine if you are eligible for homestead portability and how it could benefit you. 

If you have any questions, don’t hesitate to reach out to our team at 941-205-8811. We love helping our clients find new ways to keep money in their pocket.