Two people have asked me about homestead portability in the past week, so it seemed like an obvious blog topic. The Save our Homes Amendment to Florida’s constitution caps the amount that property taxes may increase by 3% or by the percent change in the Consumer Price Index (CPI), whichever is lower. Therefore if you purchased your home 20 years ago it was assessed back then and its assessed value has only been able to creep up by a maximum of 3% per year. The real value of real estate has increased at a rate well over 3% annually, so the value of the property is much higher than the taxable amount.
In addition to limiting the amount that property taxes can increase year over year, the Save our Homes Amendment also allows homeowners to “port” a part of their homestead exemption when they purchase a new primary residence. This allows the people who have lived in their homes for 20 years to move without being slammed by exceptionally high new taxes when they purchase a home at today’s market value. How does it work?
• If you buy a house that is worth more than your previous residence, then:
o If the market value is $200,000 but it is assessed at $100,000, then the differential is $100,000
o If the new home is purchased for $600,000, then the $100,000 cap differential means that its tax assessment would be no more than $500,000
• If you buy a house that is worth less than your previous residence, then:
o To determine the differential, divide the new home’s market value by the old home’s market value, then multiply by the old house’s assessed value, which will give you the new assessed value.
o Assuming that the old house’s market value was $600,000 and its assessed value was $500,000 and the new house’s market value is $100,000, the equation looks like this: $100,000 / $600,000 x $500,000 = $83,333.33 (new house’s assessed value)
• Whether the new home is more or less valuable than the previous one, the cap differential amount may not exceed $500,000
So many people tell me that they are hesitant to move because they will lose their homestead exemption savings, and while that is partly true, the Save our Homes Amendment does help. If you have questions about your homestead exemption or its portability please do not hesitate to call me, Ashley Cusack at 305.798.8685, or visit my website at: Luxury Miami Real Estate.
My focused dedication as a realtor in my home town of Miami for over 25 years, consistently puts me at the top of my field. Whether you’re looking to buy or sell your home, let me help you from start to finish with my results-proven: professional marketing, excellent property exposure and comprehensive experience.