In addition to the absence of certain major taxes in Florida, there are numerous laws in place to ensure that the taxes they do have are kept in check for the state’s permanent residents.
Florida Homestead Exemption
A major benefit of living in Florida is the Florida Homestead Exemption, which rules that permanent residents cannot be taxed on up to $50,000 of their primary home’s assessed value.
As part of the law, all Florida residents are eligible for a $25,000 exemption on the assessed value of their home. Those with an assessed value of more than $50,000 (i.e. $50,001 and up) are eligible for an additional $25,000 exemption, depending on the value of their home. The exemption can only be applied to non-school taxes, and the property must be worth at least $75,000 to receive the full $50,000 exemption amount. (Those 65 and over could be eligible for an additional $50,000 exemption, making the concept of moving to the state for retirement that much sweeter.)
Florida has been generous in allowing residents to claim this exemption, applying it to homes, condos, co-ops and even some mobile homes. But to receive it, you must be a Florida resident, and the home must be your primary residence.
Save Our Homes Amendment
Technically part of the Florida Homestead Exemption, the Save Our Homes Amendment goes one step further in protecting homeowners by limiting the annual increase in tax assessment to 3 percent per year for properties that qualify. That means that even if the value of your home suddenly spikes (and hopefully it will) you won’t get hit with an unexpectedly large spike in property taxes, as well. (Home construction and other improvements may disqualify you from receiving the 3 percent limit, so discuss the benefits or drawbacks of such projects before you take them on)
Starting in January 2009, Florida property owners also began receiving this type of protection on their second homes when a law went into effect stating that the rate increase on second properties would be capped at an annual rate of 10 percent per year.
Residents aren’t the only ones to benefit from the Save Our Homes amendment. The SOH also protects businesses by exempting them from the first $25,000 in tangible personal assets for their business.
When it comes to the Save Our Homes Benefit, another term you’ll hear a lot is “Portability.” Portability is the ability of a homeowner to retain the benefits they’ve accrued through SOH, even when they move to another home of greater or lesser value.
For instance, logic says that Florida homeowners benefiting from the Save Our Homes benefit are paying less-than-market value for the property taxes on their homes, as the amount they pay each year is capped (unlike taxes in the open market). As such, it’s natural to assume that some residents would be reluctant to move and take on higher property rates, along with a potentially higher mortgage.
To prevent that, Portability allows you receive a similar benefit on your new home, even though it’s assessed at current market value. Pretty cool, right? The amount will vary depending on the value of your new home, and whether you are upsizing or downsizing on your move. (If you’re upsizing, you’ll be able to keep the entire benefit. If you’re down-sizing, you’ll receive the same percentage of the benefit applied to the new home’s value.)