Content Written By: April Wilson, Ryan Winter LLC contributing writer
One of the many benefits of having your primary residence in sunny Florida is our homestead exemption benefits. Homestead portability or a homestead assessment difference transfer is a property owner’s ability to transfer some or all of their homestead property assessed value “CAP” when moving to another homestead property. What this means is when a homeowner first purchases property in the state of Florida and files for a homestead exemption, the “Save Our Homes” tax benefit protects their homestead property’s assessed value from increasing more than 3 percent per year.
When the property owner decides to move, they can file for portability to transfer some or all of “their Save Our Homes (SOH) assessment limitation from their old homestead to a new homestead, lowering the assessed value for the new homestead,” The Florida Department of Revenue explains.
“A homeowner must have a Homestead Exemption in place on their current residence to qualify for Portability,” the City of Jacksonville said.
Starting January 1, 2021, property owners with a homestead exemption will have 3 years (instead of the original 2 years) to transfer their “Save Our Homes” tax benefit to a new property. If a property owner does not file for portability within 3 years of selling the original property with the homestead exemption, they will lose their “CAP” and will need to file for a new homestead exemption at the current market price. The SOH benefit is only eligible concerning homestead properties in the state of Florida. You can transfer your Florida SOH benefits from county to county within Florida, but not to or from another state.
Breaking Down Homestead Exemption
The State of Florida has a few property tax exemptions, including a homestead exemption. Florida property owners can receive a $25,000 property tax exemption for their primary residence. An additional “$25,000 homestead exemption is applied to homesteads that have an assessed value of more than $50,000. The homestead exemption reduces the taxable value of a property,” Ballotpedia said.
The Florida Department of Revenue breaks down the process for a homestead exemption and its use in their Save Our Homes Assessment Limitation and Portability Transfer brochure.
In the brochure, the Florida Department of Revenue explains that first, a homestead property owner will need to file for a homestead exemption. Once the property gets the homestead exemption, a property appraiser will come out and assess the property at a “just value.” Values are assessed as of January 1 of the tax year. The property owner now has a property tax exemption for that year… but what about the next year?
That’s where the “Save Our Homes” benefit comes into play. This Amendment from 1992 approved a limit on an assessment increase on a homestead after a homestead exemption is in place.
The original property appraiser assessment is for the homestead exemption. “The assessment for each following year cannot increase more than 3 percent or the percent change in the Consumer Price Index (CPI), whichever is less,” the brochure said. The Florida Department of Revenue explains this as the “‘Save Our Homes’ (SOH) assessment limitation. The accumulated difference between the assessed value and the just (market) value is the SOH benefit.”
What If I Move? Can I keep my Homestead Exemption? Will My SOH assessment limitation change?
The Florida homestead exemption is for primary residences in the state. If a homeowner sells their primary residence, they will lose their homestead exemption for that property. However, they can transfer some or all of their SOH assessment limitations.
According to the Florida Department of Revenue: “You must file the Transfer of Homestead Assessment Difference Form DR-501T with the homestead application Form DR-501 for your new home. The due date to file these forms with your county property appraiser’s office is March 1.”
Once the homeowner files these forms and if they are in fact eligible, portability will allow them to “transfer their SOH benefit from their old homestead to a new homestead, lowering the tax assessment and, consequently, the taxes for the new homestead,” The Florida Department of Revenue said.
The approval of Florida Amendment 5 on the Nov. 3, 2020 ballot extended the time frame a homeowner is eligible to transfer their SOH. Starting January 1, 2021, homeowners will have 3 years to transfer their SOH assessment limitation.
Homeowners may be eligible to transfer, or port, up to $500,000 in capped value.
For example, if a homeowner’s old home was worth $300,000, but was assessed at 200,000 due to SOH benefit, they have a $100,000 CAP. This means the property owner could transfer the $100,000 CAP, using homestead portability, to the new property. If the new property is worth $450,000, the CAP of $100,000 would bring the assessed value down to $350,000 for the first year. Then, the assessment would not go up more than 3 percent every year after that.
Combining Households
What if two people who each own their own homes decide to move in together? Can you still transfer their homestead assessment difference to the new property? The good news is the property appraiser will take whichever homestead assessment results in the highest CAP differential (up to $500,000) – meaning whichever will result in the highest tax savings.
If people living in a homestead property decide to not live together anymore and want to sell the property for separate homestead properties, the property appraiser would again choose the option that results in the highest CAP differential – but then would divide that evenly among the owners.
Amendment 5
On the Nov. 3, 2020 ballot Amendment 5 was voted on and approved. This Amendment allows for individuals to file for homestead portability up to 3 years after selling their homestead property. Marika Sevin, Attorneywith US Patriot Title says this is a “nice amendment for people who have decided to sell while prices are high but want to wait to purchase a new homestead property. This Amendment gives them 3 years to transfer their benefit, instead of the original 2 years.”
Sevin also says it’s a good idea for first time home buyers to file for their homestead exemption so they can lock in their assessed value and start receiving their SOH benefit. “It’s kind of like rent control on your property taxes,” Sevin said. “For young buyers, this can result in a huge savings over time.” Remember, every homestead property owner in the state of Florida is eligible for the homestead exemption and the SOH benefit.
Helpful Links
It’s important to file your homestead exemption and homestead portability correctly. Each Florida County has their own process for filing. Here are some additional helpful links:
Florida Department of Revenue
Duval County
St. Johns County
Clay County
