What Is the Florida Homestead Exemption and How Does It Work?

The Florida homestead exemption is a property tax benefit available to homeowners who occupy their primary residence in Florida. This exemption reduces the taxable value of a property, which lowers the amount of property taxes a homeowner must pay each year. Florida residents can apply for this exemption on their primary home, providing them with significant savings on their annual property tax bill.

How the Florida Homestead Exemption Works

The primary feature of Florida’s homestead exemption is the $50,000 reduction in the taxable value of a home, which applies to all owner-occupied primary residences. The exemption is structured as follows:

1. The first $25,000 of the home’s assessed value is exempt from all property taxes, including local government, county, and school taxes.
2. The second $25,000 applies to the portion of the home’s value between $50,000 and $75,000, and is exempt from non-school property taxes. This means that school taxes still apply to this portion of the home’s value, but local government and other property taxes do not.

How to Qualify for the Florida Homestead Exemption

To qualify for the Florida homestead exemption, you must:

1. Own the property. You must be the legal owner of the property.
2. Use the property as your primary residence. The home must be the primary residence of the homeowner as of January 1 of the tax year. This means the homeowner must reside in the home for the majority of the year.
3. Be a permanent resident of Florida. You must be a legal resident of Florida as of January 1 of the tax year. Proof of residency may include a Florida driver’s license, voter registration, or other documents that show Florida as the applicant’s primary residence.
4. Apply by March 1: You must file for the homestead exemption with your county property appraiser’s office by March 1 of the tax year. Applications received after this deadline may not be eligible for the exemption until the following year.

Once approved, the homestead exemption automatically renews each year if you continue to use the property as your primary residence. However, any changes in ownership or residency status must be reported to the property appraiser to avoid penalties.

Save Our Homes (SOH) Cap

Florida’s Save Our Homes (SOH) provision offers additional protection to homeowners by limiting the annual increase in the assessed value of a homestead property. Under this law, the assessed value of a homestead property cannot increase by more than 3% annually or the rate of inflation, whichever is lower. This cap applies only to properties that have qualified for the homestead exemption and remains in effect as long as the homeowner keeps the property as their primary residence.

This feature is especially important in Florida, where real estate prices can fluctuate significantly. Without the SOH cap, homeowners could face sudden increases in property taxes as their home’s market value rises. The cap provides a measure of predictability and stability for property taxes by ensuring that tax bills rise at a more controlled pace.

For example, if a home’s market value rises by 10% in one year, the SOH cap ensures that the assessed value used for tax purposes only increases by 3%, protecting the homeowner from the full impact of the market change.

Portability of the Save Our Homes Cap

Florida’s homestead exemption also includes a portability feature, allowing homeowners to transfer some of their SOH cap benefits when they move to a new primary residence within the state. Homeowners can transfer up to $500,000 of their SOH benefit to the new home, effectively reducing the taxable value of the new home by the amount of SOH protection they had on the previous property.

For instance, if a homeowner sells their primary residence and buys a new one in Florida, they can carry over the difference between the old home’s market value and its SOH-capped assessed value to the new property. This provides continued tax savings and prevents a large tax increase after moving.

Additional Homestead Exemptions

In addition to the basic $50,000 homestead exemption, Florida offers additional exemptions to certain groups. These additional exemptions can further reduce the taxable value of a home and provide extra savings on property taxes.

Some of the most common additional homestead exemptions include:

• Senior Citizen Exemption: Available to homeowners aged 65 or older who meet certain income requirements. This exemption can reduce property taxes for seniors who qualify, providing extra relief for those on fixed incomes.
• Disability Exemption: Available to homeowners with permanent disabilities. There are different levels of disability exemptions, including exemptions for veterans with service-related disabilities.
• Veteran Exemption: Florida provides various exemptions for veterans, including those with service-connected disabilities. Veterans who qualify can receive additional reductions in their taxable value.
• Widow/Widower Exemption: A small additional exemption is available for widows or widowers who are Florida residents.

These exemptions are additive, meaning homeowners may be able to combine multiple exemptions to maximize their tax savings.

What Happens to the Homestead Exemption If the Homeowner Passes Away?

If the homeowner passes away, the homestead exemption can generally be transferred to a surviving spouse or dependent.

How Does the Homestead Exemption Affect Estate Planning?

The Florida homestead exemption plays a significant role in estate planning. It provides asset protection during the homeowner’s life and has implications for inheritance. The property may be automatically passed to the legal heir(s), often with continued protection from creditors.

Heirs who inherit the property must meet certain criteria to maintain the homestead status.

What If I Rent Out My Homesteaded Property?

Renting out your homesteaded property can affect its exempt status. To maintain the exemption, the property must be your primary residence. Renting it out may indicate that it’s no longer your primary residence, potentially leading to a loss of the exemption.

There are exceptions for partial or short-term leases.

Can I Have a Homestead Exemption in Another State Too?

No, you cannot simultaneously have a homestead exemption in Florida and another state. The Florida Homestead Exemption is specifically for your primary, permanent residence. Claiming an exemption in another state can lead to the loss of the Florida exemption and potential legal penalties.

Maintaining residency in Florida is a requirement for the exemption. This includes having a Florida driver’s license, voter registration, and other proofs of residency.

How Is the Homestead Exemption Enforced and Monitored?

County property appraisers in Florida ensure that homestead exemption benefits are correctly applied. They routinely review exemption claims and may request additional documentation to verify eligibility.

If a homeowner is found to have falsely claimed the exemption, they may face penalties, including repayment of exempted taxes, penalties, and interest. In some cases, legal action may also be taken.

What Steps Should I Take If My Application Is Denied?

If your homestead exemption application is denied, you should first understand why. The property appraiser’s office can explain why your application was not approved.

You have the right to appeal the decision. This typically involves presenting additional documentation or clarification regarding your residency status or property ownership. The appeal process and deadlines vary by county, so prompt action is necessary.