Florida has the Save Our Homes benefit that limits increases in your property taxes due to increases in your home’s market value. If you buy a new home in Florida, you can transfer the savings to your new home.
How does Save Our Homes work?
Save Our Homes limits increases in your home’s assessed value to 3% per year. Your Save Our Homes benefit is the difference between the assessed and market values.
For example, let’s say you’re home’s market value increased by $150,000 but Save Our Homes limited the increase in your assessed value to $50,000. You have a $100,000 benefit.
How does homestead portability work?
Homestead portability allows the transfer of homestead assessment benefits from your previous homestead property to your new home.
Let’s say your new home has a market value of $300,000. You have a $100,000 benefit from your previous homestead. The assessed value of your new home will be $200,000.
One important thing to note is that you can only keep your full benefit if you buy a new home of equal or greater market value to your previous home. If you downsize, you get a prorated benefit based on your new home’s market value divided by your old home’s market value.
Examples:
- $200,000 home to $250,000 home: keep full benefit
- $200,000 home to $200,000 home: keep full benefit
- $200,000 home to $150,000 home: keep 75% of your benefit
- $200,000 home to $100,000 home: keep 50% of your benefit
- $200,000 home to $50,000 home: keep 25% of your benefit
Is portability automatic?
Homestead portability is not automatic. You have to apply for it.
When you buy a new home,
- Go to the county property appraiser’s office for your new home. Some larger counties also offer online services.
- Fill out the application for the Homestead Exemption for your new home.
- Fill out the portability application to transfer your benefit.
- Your new property appraiser will get your benefit amount from your old property appraiser and apply it to your new home’s assessed value.
- Check their math. The process is supposed to be automatic, but mistakes can happen.
How does portability transfer work if you have an SOH benefit on jointly owned property?
If you’re moving to a new homestead together with your spouse, the process is the same as above.
Spouses can also divide their benefit from a jointly owned previous homestead either because of a divorce or for other reasons. Before filing for portability, you’ll need to complete an abandoned homestead form.
Form DR-501TS Designation of Ownership Shares of Abandoned Homestead says what percentage of the benefit each spouse receives. It does not have to be 50/50 and is subject to your agreement or a divorce court’s order.
Once you’ve decided your benefit, the process works as normal. For example, if you jointly had a $100,000 benefit and divide it 50/50, each spouse can port $50,000 to their new home.
How does portability transfer work if two property owners move from individually held property to jointly titled property?
If you own a home individually and buy a new homestead property with someone else, you can transfer the larger SOH benefit.
A common example of this is when two people who own a home get married, sell their old houses, and buy a new house together.
Assume that one property owner has a $150,000 tax benefit and the other has a $100,000. The benefit on the new home would be $150,000 (not a combined $250,000).
Two spouses can theoretically each maintain a separate Homestead Exemption, but this would typically require living in separate homes and meeting the other usual Homestead Exemption requirements.
How long do you have to use portability?
While most people immediately use portability as they move from one house directly into another, this is not a requirement. You have up to three tax years to establish a new homestead.
A common situation where this applies is if you sell your homestead property then temporarily rent during your property search for a new home.
It’s important to understand what a tax year is. The Florida Homestead Exemption is as of January 1st. Each January 1st counts as a tax year.
For example, if you sell your homestead property at any time during 2022, the third January 1st is January 1, 2025. If you sell in December 2022, you still only get until January 2025 not December 2025. So three tax years can sometimes be two years and one day.
If you miss the three-year deadline, you will typically lose your SOH benefit. You can still receive the Homestead Exemption on your new home, and your SOH benefit would start over as if you were a first-time homebuyer.
Is there a limit to the amount you can transfer with portability?
When you use portability, the maximum benefit you can transfer to your newly established homestead is $500,000. Remember that this is based on the difference between the assessed value and market value of your original home rather than its full value.