Ok to continue with the Property Tax theme from a couple of weeks ago.
Another question I get from time to time is how the Homestead portability works? Again this is a very complicated topic and I would have you get any info on your personal situation directly from the Property Appraiser's officewww.paslc.orgbut here is my shot at trying to simplify it as much as I can for understandability.
First, if you don't already know if you had a homestead exemption on your prior property you can (and should) port the exemption to the new property. The reason why this is important instead of just applying for a new $50,000 exemption is because in Florida, the assessed value that can be taxed is only allowed to increase by a max of 3% a year.
I will use my own recent personal property buying/selling experience as an example (I am going to round numbers for ease).
We purchased our prior home at the bottom of the market for $75k in 2010. We sold our home in 2017 for $275k. Now the property appraiser's value is almost never the same as market value and usually much lower (I think most would all agree this is a good thing!). At the time of sale (2017) our home was valued by the property appraiser at $165k but since it had been being capped at no more than 3% increase for the past 7 years it was only assessed at $105k -$50,000 exemption= taxed at $55k. This made our Portable value $60k (165k-60kcap=105k). Now we purchased our new home for only $15k more at $290k. It had been purchased by the prior owners at the top of the market (2005) at $348k the appraised value does not fall as fast as it rises so when we purchased it the property appraiser had it valued at $245k we got to port the $60k exemption so our assessed value is now $245k-$60kportable cap=$185k-$50k homestead exemption= taxed on $135k.
I was very surprised when I got that new tax bill because we had only paid $15k more for the home than we had sold our prior for, why did my taxable value go up $80K? I called and was told that I was lucky I had the portability because I would have been taxed on $195k if not for that additional $60k ported exemption! (didn't feel so lucky).
So the moral of this story is that yes, you can port your cap, and it is a very useful and important discount. But be aware of the assessed value of the home you are purchasing compared to the assessed value of the home you sold even if they are almost the same price. You also should note that you have 2 years to use the portability. You can rent for a year in between but you must use it by the 2nd year or it goes away.
I love to help buyers and sellers navigate the Real Estate world you can call me anytime to pick my brain (No Charge! ).
Dawn Burlace, PA, Realtor®
Atlantic Shores Realty Expertise
Serving the Treasure Coast of Florida
(Indian River, St Lucie, Martin and Northern Palm Beach Counties)
Here is the explanation on the Property Appraiser's website. A good resource but very vague when it comes to real life numbers.
Portability in Florida refers to the ability of a property owner to transfer some or all of the Save Our Homes benefit on a previous homestead to a newly established homestead. The law was passed as a constitutional amendment in January 2008. The Save Our Homes benefit is the difference between the market (or just) value and assessed value. State law allows you to transfer your Save Our Homes benefit to a new home if you claimed the Homestead Exemption in either of the two preceding tax years. Important points to consider when filing for Portability:
To transfer your assessment difference you must have received a homestead exemption on the previous Florida homestead property in either of the two preceding tax years and must be an owner of the new Florida homestead property.
If you and your spouse (or former spouse) would like to designate shares of the homestead assessment difference then you must file a DR-501TS DESIGNATION OF OWNERSHIP SHARES form before you file your portability application.
To transfer your assessment difference you must have established a new homestead on or before January 1 within two tax years after abandoning your previous homestead
(Example: for a homestead abandoned in 2017, you must qualify for the new homestead in either the 2018 or 2019 tax year. If you don’t understand this requirement, please contact our office.)
You should file for Portability at the same time you apply for the new homestead exemption. Applications should be filed by March 1. You can file in either of our office locations or online.
The amount is either transferred in its entirety or as a percentage depending on the value of the new property. The maximum transfer amount is $500,000.
Per Florida Statute, the portability benefit is calculated as follows: