Rules for Second-Time Homebuyers in Florida
Owners of homesteaded properties in Florida generally pay significantly less property tax than owners of non-homesteaded properties. In order to revitalize the real estate market, the legislature passed a constitutional amendment in 2008 that allows a homesteader to buy a more expensive owner-occupied homesteaded property without necessarily paying higher property taxes. There are no other rules or mortgages that would be different between a first-time and second-time Florida homeowner other than the fact that the buyer would not be eligible for first-time homeowner loan assistance if he had owned an owner-occupied property during the past three years.
Other People Are Reading
-
Background
-
Florida experienced rapid and dramatic increases in property values between 2003 to 2006. It was not unusual for neighborhood values to double or triple in a year. Homeowners who had filed for homesteading were protected from dramatic annual property tax increases, but if they wanted to sell their home and buy another, they faced the very real possibility that the new property taxes would be two to three times higher than what they were currently paying. So people stayed put and the market stagnated. In 2008 the law was changed to allow homesteaded individuals to move without experiencing such a dramatic increase in property tax. This is known as the "portability of homestead savings." In 2011, property values have fallen so drastically that this benefit lost some of its significance.
Homestead Qualification
-
All legal Florida residents are entitled to file for a homestead property-tax exemption if the home is an owner-occuped primary residence. The property can be a single-family home, condominium, co-op apartment or, in some cases, a mobile home. The homeowner must have lived in the property by January 1 of the year in which the exemption is sought, and file by March 1. If the property owners have another homestead in any other state or country, it must be cancelled in order to meet Florida's requirements.
-
Homestead Benefits
-
All qualified homestead owners receive at least a $25,000 deduction from the assessed value; if the property is assessed for more than $75,000, the assessed value is reduced by $50,000. Additional deductions can be taken for widows and widowers, blindness, total disability, veteran's disability of 10 percent or more, combat-wounded Florida veterans, low-income seniors 65 or older and for "granny flats" in which the home has been extensively renovated to provide housing for a parent or grandparent
Save Our Homes Law
-
Properties in Florida are assessed January 1 of every year. The Florida Save Our Homes law prevents the assessed value of a homestead property from increasing more than three percent per year. During periods of appreciating values, this protects the owner from drastic annual tax increases. Homestead status is not transferable. When you move, you must file another application. You can transfer your "Save Our Homes" benefit to another Florida property as long as you file for another homestead within two years of "abandoning" -- no longer claiming it as your permanent residence -- the prior homestead. You must, however, reside in the new property as of January 1 of the year in which you are filing, so the time limit is usually less than two years.
Save Our Home Portability
-
The rules regarding portability are complex, but such an application should be filed with your new homestead application. A maximum of $500,000 in Save Our Homes benefits can be moved from one Florida homestead property to another newly purchased property. The Florida tax record shows both the Save Our Homes value as well as the fair market value for residential properties. Subtracting the Save Our Homes value from the fair market value gives you the "portability value" that you can deduct from your new homesteaded property's assessed value when you purchase a more valuable property. If you downsize, divide the "portability value" by the fair market value, which gives you a "portability factor." Multiply the new property's fair value by the portability factor to calculate the amount of savings that can be deducted from the fair value of the new property.
-
References
- Photo Credit Jupiterimages/Comstock/Getty Images
