Homestead Exemption

Homestead Exemption in Florida

homestead exemptionWhat is Homestead Exemption and what are the benefits?

Ultimately, you are able to reduce your annual property taxes if you qualify for a homestead exemption.

What does ‘Homestead’ Mean?

Homestead involves selecting one property in Florida as your primary residence. Additionally, you must live in the property for a minimum of 6 months and 1 day. By qualifying for homestead, you will receive two significant tax benefits:

  • First, married couples receive a $50,000 reduction in the assessed value of their home.  This means the taxable value of your home is reduced by $50,000. Or, if you are single, you will receive a $25,000 reduction on the taxable value of your home.
  • Second, the county must limit the increase in the assessed value of a home by no more than 3% per year. This is part of the ‘Save Our Homes’ statue under Florida state law.

How Does it Work?

If you are a Florida property owner, you are entitled to a $25,000 homestead exemption from the assessed value of your home.  Further, the exemption applies to city, county, and school board taxes.  Therefore, before the property tax appraiser determines your annual tax bill, the exemption amount is deducted from the assessed value of your property.  Then the appraiser calculates your taxes based on the lower property value which results in a lower property tax bill.

Additionally, as a homeowner, you are entitled to another $25,000 exemption from city and county taxes on the property’s assessed value between $50,000 and $75,000.  Although, school board taxes are exempt from this additional reduction.

Finally, if your homesteaded property has an assessed value of $75,000 or more, you are entitled to the entire $50,000 homestead exemption. Bonita homes or Naples homes with an assessed value of $50,000 or less are entitled to the base $25,000 exemption.

The table below displays the applicable homestead exemption depending on the amount of the assessed value of your home.

homestead

Who Determines the Assessed Value of Your Home?

In southwest Florida, the assessed value of your home is determined by the Lee or Collier County Property Tax Appraiser.

How do I Qualify for Homestead Exemption?

To qualify you must be a permanent resident of Florida as of January 1st of the year in which you apply for the exemption. However, you must submit your application prior to March 1st if you want to be eligible for the exemption for the upcoming tax year which begins October 1st.  In the meantime, your taxable value will be based on the purchase price of your home.

What Happens if You Purchase a Home After March 1st?

If you purchase a home after March 1st, you may submit an application for the following year.  For example, if you purchase a home on April 1, 2016 and apply for homestead and your application is approved, your homestead exemption will go into effect in October of 2017.

Another important factor is only one residence is eligible for homestead exemption.  So,  “Florida Statutes allow only one Homestead Exemption per “family unit” according to Florida State Law.

What is “Save Our Homes”?

The Save Our Home Amendment of the Florida Constitution caps how much the assessed value of homesteaded property may increase in a given year. In short, the Florida Constitution prevents the assessed value of your homesteaded property from increasing more than 3% per year, or the percent change in the Consumer Price Index, whichever is lower.

Another benefit of Save Our Home Amendment is its portability. Thus if you decide to move to a new home, you have the ability to carry over your homestead exemption up to $500,000.  Equally important, you must establish homestead in your new home within 2 years of your previous homestead.

Finally, in order to port Save Our Homes benefits, when filing an application for your new homestead exemption, you must also file Form DR-501T, for Transfer of Homestead Assessment Difference by March 1st of the year you intend to establish a new homestead.

You May Qualify for a Bonus Benefit:

No state income tax in Florida!  If you currently live in a state that charges state income taxes and you decide to make your Florida property your primary residence, you will save even more money by eliminate the state income taxes you have been paying.

Where Do You Go to Apply for Homestead?

Bottom Line:

Without a doubt, if you qualify for a homestead exemption, you will lower your annual property taxes.  Likewise, if you spend less than 6 months in Naples or Bonita Springs, you may want to consider it is time to make southwest Florida your primary residence which will save you money.

When you’re ready to upgrade your existing home or start searching for your new home in Naples or Bonita Springs, let me be your guide!

About Matt Klinowski


Naples Golf GuyMatt Klinowski has lived in SWFL for more than 16 years and is an expert in the local real estate market. In particular, Matt specializes in helping buyers and sellers with real estate transactions in golf communities.  Matt enjoys the laid back lifestyle in Naples with his wife of 20 years (More about Matt…).
Contact Matt:  Matt@NaplesGolfGuy.com or 239-370-0892

August 28, 2016 Posted by Matt

Save

Save

Save

Save

Save

Save

Save

Save

Save

Save

Save

Save

Save

Save

Save

Save

Save

Save

Save

Save