When a house is sold, the cap and exemption are removed at the end of the calendar year, and taxes are calculated on the full market value, also called the Just/Market Value. The property will fall under the limitations of the Save Our Homes Cap the second year of the new owner's Homestead Exemption. Therefore, if a property owner applies for and receives Homestead Exemption for 2014, the Assessed Value will be capped in 2015. To determine taxable value, any exemptions are subtracted from the Assessed Value to reach a Taxable Value, which is then multiplied by the annual Millage Rate set by the taxing authorities to reach the amount of tax due.
Because a change in property ownership will effectively "reset" the Capped Value to full market value, it is important to be aware when purchasing a home that benefits from the cap, that it can be expected that property taxes will increase the next year because the assessed value must be adjusted to equal current market value.
The increase due to the removal of the Cap may double or even triple taxes, depending on how long the previous owner had homestead exemption. The table below illustrates this. (For example, if the Millage rate for this fictitious property was 23 mills, then the previous owner would have paid $1284†, whereas one year later the new owner would pay $2,733† - a substantial increase.)
How the Cap Works when a Property Sells:
Previous Owner's CAP 1st Year of New SOH: 2nd Year of SOH: Just/Value (Increases with Market): $150,000 $160,000 $170,000 Assessed (Capped) Value: $97,000* $160,000 $162,400** Less Exemptions: -$50,000 -$50,000 -$50,000
Taxable Value $47,000 $110,000 $112,400
*(For this example, the previous owner's Assessed Value has been capped for several years and is therefore significantly lower than the current Just/Market Value.)
**(For this example, Property is capped at 1.5%, cap Rate for 2011 - actual cap rate will vary yearly.)
† School taxes are not included in the second $25,000 exemption, and must be added back in. The 2011 school millage is 8.39.
If additions or improvements are made to the property, the value of those improvements will be added to the roll regardless of the cap. For example, if a pool is added to a property, the value can increase no more than the cap rate, plus the value of the pool. If we correct such items as size, number of bathroom fixtures, installation of heat and/or air conditioning, the value of those corrections will also be added to the roll above the cap.
To help you to determine an estimate of property taxes, go to the Search Our Database page and find the property via owner name, address or parcel number. The resulting page will display the amount of taxes without the Save Our Homes cap or an exemption. You can also call our Information Services Division at 727-464-3207 for this and other valuable information.
The fine print...The cap does not apply to properties that are not homesteaded or are rented. Multi-family properties may qualify based on percentage of use. For example, if you own a duplex, live in one half and rent the other half to a tenant, only 1/2 of your property value will be capped.
The cap remains in effect upon the change of title due to divorce or death of a spouse as long as the remaining owner continues to live on the property as their permanent address.
Homestead property owners are able to transfer their Save Our Homes (SOH) benefit (up to $500,000) to a new homestead within two years of giving up their previous homestead. This is called Portability
If the just value of the new homestead is more than the previous home's just value, the entire cap value can be transferred.
If the new homestead has a lower just value, the percentage of the accumulated benefit may be transferred to the new homestead.
Homeowners may transfer their SOH benefit to a new homestead anywhere in Florida within two years of leaving their former homestead if the new homestead is established by January 1. For example, if you moved during 2012, the exemption remains on your home until December 31, 2012. You have until January 1, 2014 to qualify for a new exemption and port the benefit to a new homestead. This provision applies to all taxes, including school taxes.
For property owners who have the homestead exemption and the Save Our Homes cap, and who do not give up their homestead, the exemption and cap status remain unchanged.
Click here for an example of portability.
Click here to learn about the portability calculator.
What to do:
A separate application must be completed by March 1 to qualify for portability.
If you own another property (2nd home, beach house, etc.) and establish your homestead there, you can remove the homestead from the old property and apply for the portability benefit.
DEADLINE TO APPLY FOR PORTABILITY IS MARCH 1
Click here to be directed to the Florida Department of Revenue website for more information(Click here to view the rule.) (See the graph below)
Will I Lose My Homestead Exemption if I add someone to my deed?
Adding names to the ownership of your home normally does not change your Homestead Exemption, BUT you may lose all or part of the protection your property receives from the Save Our Homes (SOH) assessment limitation or "cap". The SOH cap keeps the assessed value (not the taxes) of your home from increasing more than 3% per year as long as you maintain your Homestead Exemption. A loss of protection from the SOH cap will increase the amount of property taxes you pay.
Will I lose my Save Our Homes Cap if I add someone to my deed?
Maybe, depending on how you own the property (the "tenancy"), and if the new owner files for Homestead Exemption on your property. "Tenancy" is the term used to describe the way property is owned, the relationship between the owners, and what happens to the property when an owner dies. The most common forms of tenancy are: Tenancy by the Entireties, Joint Tenants with Right of Survivorship, and Tenants in Common. If two or more people own property with a homestead exemption, the type of tenancy that appears on the deed can have an effect on the "Save Our Homes" provision, and ultimately the amount of taxes that are owed.
- If the new owner is your spouse, or someone who is legally or naturally dependent on you, he or she must apply for homestead exemption. Your current Save Our Homes cap will not be adjusted.
- Joint Tenants with Right of Survivorship: If the new owner is a joint tenant with right of survivorship, and he or she DOES NOT apply for Homestead Exemption, your SOH cap WILL NOT be adjusted.
If the new owner is a joint tenant with right of survivorship and DOES apply for Homestead Exemption, your SOH cap WILL be adjusted to market value and start anew the following year. In future years, the SOH Cap will protect 100% of the property.
One Important Note! If the new owner is living with you and intends to make the property his or her permanent residence, it may make more sense to apply for the new Homestead Exemption now rather than waiting until a later date. Your Homestead Exemption and SOH cap protects only you, and not the new owner. In the future if you no longer reside in this home, the new owner will have to apply at that time, and the property value and taxes will most certainly be much higher than they are now.
- Tenants in Common: If the new owner is a tenant in common and DOES NOT apply for homestead exemption, your SOH cap WILL BE adjusted to protect only your proportionate or "percent" interest in the property. The "percent" interest of any owner who does not have homestead exemption will be assessed at market value each year.
If the new owner DOES apply for Homestead Exemption, your SOH cap WILL BE adjusted to market value and start anew the following year.
Can Someone "inherit" the Save Our Homes value when inheriting a family-owned property?
Probably not. In general, a person cannot "inherit" another's homestead exemption or Save-Our-Homes Cap benefit, even if he or she inherits the property. When property changes ownership after the death of the homesteaded owner, the decedent's exemption is removed at the end of the year. The new owner must file for her own exemption once she has ownership of the home. There are two exceptions which allow someone to "inherit" an existing Save-Our-Homes Cap benefit:
- A surviving spouse may retain the existing Save-Our-Homes Cap -- even if the survivor was not previously on title -- so long as the surviving spouse subsequently files for homestead exemption;
- The existing Save-Our-Homes Cap may be retained if the person inheriting the property -- or being granted a life estate or beneficial rights under a trust -- was naturally or legally dependent of the decedent AND was permanently residing on the property at the time of the decedent's death. (see: Section 193.155 (3), Florida Statutes)
In all other instances, the person inheriting the property must file for a new Homestead Exemption.
Can I "undo" or cancel a deed that is already recorded?
If the wording of your current deed has consequences that you did not intend, you may want to consider a corrective deed. Please consult an attorney, title company or other real estate professional to help you prepare your corrective deed. The Property Appraiser's office cannot advise you, since there are many serious considerations that go beyond how homestead exemption is calculated, including income and estate tax consequences. We recommend that you never attempt to change your deed without the help of a professional.
Are there other ways of transferring my property for estate planning that will not disturb my Homestead Exemption or SOH Cap?
Two methods of transferring your property will, in most cases, keep your Homestead Exemption and SOH intact: reserve a Life Estate for yourself or transfer your property to your trust. Please consult your attorney or estate planning professional before attempting either option.
If you transfer your property to a trust, your attorney should know that three criteria are required in order for your Homestead Exemption and SOH cap to remain intact:
- You as the homestead owner must have beneficial or equitable title to real property. In other words you must be the trustee or beneficiary of the trust. If you are the beneficiary but not the trustee, your interest must be in REAL property, not PERSONAL property.
- You must have the present possessory interest in the property. Simply, you must have the right to live there.
- The deed that transfers the property into the trust must be recorded.
Can my attorney contact you if he or she needs to?
Absolutely! You, your attorney or estate planning professional are encouraged to call our Exemptions Department with any questions you may have. We can be reached at (727) 464-3294.
PLEASE CONSULT YOUR ATTORNEY OR ESTATE PLANNING PROFESSIONAL. THIS INFORMATION IS PROVIDED ONLY TO HELP YOU UNDERSTAND HOMESTEAD EXEMPTION AND DOES NOT CONSTITUTE LEGAL ADVICE.
Save Our Homes Annual Increase
YEAR CPI CAP 2014 1.5% 1.5% 2013 1.7% 1.7% 2012 3.0% 3.0% 2011 1.5% 1.5% 2010 2.7% 2.7% 2009 0.10% 0.10% 2008 4.1% 3.0% 2007 2.5% 2.5% 2006 3.4% 3.0% 2005 3.3% 3.0% 2004 1.9% 1.9% 2003 2.4% 2.4% 2002 1.6% 1.6% 2001 3.4% 3.0% 2000 2.7% 2.7% 1999 1.6% 1.6% 1998 1.7% 1.7% 1997 3.3% 3.0% 1996 2.5% 2.5% 1995 2.7% 2.7%
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Florida Department of Revenue