Taxes

The Florida Constitution receives it’s revenue from “ad valorem taxes” (taxes based on property value) for local governments, which is their largest source of funding.  Local appraisers annually assess each privately owned property in Florida based on market value. Property appraisers also administer exemptions. Local governments set the “millage rate,” which is the rate at which properties are taxed. After accounting for certain exemptions, the “taxable value” is multiplied by the millage rate to determine the dollar amount of the tax.

FLORIDA RESIDENTS – HOMESTEAD EXEMPTION

Florida property tax Homestead exemption reduces the value of a home for assessment of property taxes by $50,000, so a home that was actually worth $100,000 would be taxed as though it was worth only $50,000. However, the second $25,000 of homestead coverage does not apply to the school portion of property taxes — and only applies to the third $25,000 of a property’s total just value. Additionally, the Florida homestead exemption caps the rate at which property assessments may be increased annually. Though millage rates may be changed, the assessed value a house with a homestead exemption can be increased by is fixed. This is the result of the “Save Our Homes” Amendment to the Florida Constitution which was passed by voters in 1992, and went into effect in 1995. The amendment caps the increase of the assessed value of a home with a homestead exemption to the lesser of 3% or the rate of inflation.

Example:  If an owner had a Homestead Exemption on a home valued at $100,000 in 1995, and the exemption was still valid in 2005, the most the home could be assessed at is Approximately $126,000. For comparison, records of the Florida Association of Realtors show the median price of a single family home during the same time increasing 138% from $86,000 in 1995, to $205,000 in 2005. A non homesteaded owner would be paying higher taxes as the property value increased.

Protection from creditors

Florida’s creditor protection homestead provision is one of the broadest in the United States. The value of the property that can be protected is unlimited, so long as the property occupies no more than ½ acre within a municipality, or 160 acres outside of a municipality. Because of the scope of the protection afforded, persons from other states with heavy debts or large court judgments against them have been known to purchase expensive estates in Florida to protect their assets. One unique feature of Florida’s Homestead exemption is that it attaches to proceeds from the sale of a home, if the homeowner intends to use those proceeds to establish a new Florida homestead within a reasonable time. Therefore, if the owner of a $1,000,000 home sells that home and puts the money in a bank account, that money is still protected by the homestead exemption, so long as the homeowner has a bona fide intent to use it to purchase another home in Florida entitled to the exemption within a reasonable period of time.

Requirements

Homestead exemptions are only available on an individual’s primary home. Therefore, this exemption does not apply to businesses, rental property, second homes, homeowner’s claiming permanent residency-based exemptions or tax credits in other states, or homes with owners that do not claim Florida as their primary residence. Because of the “portability” provision of the January 2008 constitutional amendment, a homesteaded owner may now move up to $500,000 of the “Save Our Homes” benefit from one Florida home to the next. However, acquiring a house that had a homestead exemption does not entitle the buyer to retain the low tax rate enjoyed by the previous homesteaded resident, as homestead exemptions cannot be inherited or purchased. Supporters of the “Save Our Homes” Amendment contend that it allows long term residents with a fixed income to be able to afford to stay in their homes without being driven out by tax increases as their property value increases.

Qualifications

To qualify for homestead protection, An owner must be a permanent Florida resident and the homestead property must be his primary place of residence. Property purchased as a future residence is unprotected until the property is occupied as a principal residence. A second home or investment property cannot be considered a Florida homestead. Only “natural persons” quailfy for homestead protection so properties titled in the name of irrevocable trusts, corporations, limited liability companies, or partnerships will not qualify. Property owned by a living trust can be homestead property. A newly-enacted Florida Statute provides that property owned by a land trust may be homestead property.

 FLORIDA RESIDENCY

Having a Florida residence is not the same as being a Florida resident. Courts have considered a variety of facts and circumstances indicative of a person’s ties to Florida. Florida Statute §222.17 states that a person can show intent to maintain a Florida residence as a permanent home by filing a sworn Declaration of Domicile with the clerk of the circuit court. The Statute does not exclude concurrent ownership of a residence in another state provided that primary residence is claimed only in Florida.  Florida Statute §196.012 defines a permanent residence as “that place where a person has his or her true, fixed, and permanent home and principal establishment to which, Whenever absent, he or she has the intention of returning.”

Determining Residency  (Declaration of Domicile):

  • Your designated mail address
  • Informal statements regarding residency
  • Place of your employment
  • Termination of your previous residency in another state or country
  • Registration to vote in Florida
  • A Florida drivers license
  • Florida license tags on all your vehicles
  • Using a Florida address on your federal income tax forms
  • Previously filed Florida intangible tax returns

Naturally, the longer your ties to Florida the stronger your claim to Florida residency. A property owner must be present 183 days of the year to claim Florida as their domicile.

 NON FLORIDA RESIDENTS

Non Florida residents do not qualify for the Homestead Exemption. This is not a citizenship issue, as many foreign people believe. This is a residency issue, so another US owner who does not reside in Florida more than 183 days will be paying the same rate of tax increases as an owner from another country. Foreign owners do not pay any higher rate of property taxes than other Americans who do not have their principal residence in Florida.

 IMPORTANT DATES

January 1:  Date of assessment

January 1 to April 1:  Owners of eligible tangible personal property must complete and file a return with the property appraiser 
 
January 1 to March 1: Property owners eligible for homestead, widow, widower and disability exemptions or agriculture classification must submit a completed application to the property appraiser
 
April 1: Filing deadline for tangible personal property tax return with no penalty applied
 
August: Property appraiser mails the Notice of Proposed Property Tax
 
September:  Property owners choosing to appeal their values with the value adjustment board must file a petition with the clerk of the court within 25 days of the Notice of Proposed Taxes
 
September/ October: Property owners may provide input on taxing authorities’ public hearings to adopt a tentative budget and millage rate
 
October/ November:  Taxing authorities hold a hearing to adopt a final budget and millage rate
 
November: Tax bills are sent by the tax collector