That's right! If you don't pay the government their 'fair share' of property taxes for the 'privilege' of owning a home, you can and will lose it. the government has the right to sell your home on the 'courthouse steps' to pay your property tax debt. So, with that in mind, let's discuss how to reduce your property tax debt as much as possible!

Property Taxation in Florida

The ad valorem tax or “property tax” is an annual tax levied by local governments based on the value of real and tangible personal property as of January 1 of each year. The taxable value of real and tangible personal property is the fair market value of the property adjusted for any exclusions, differentials or exemptions. Tax bills are mailed in November or each year based on the previous January 1st valuation and payment (paid in arrears) is due by the following March 31.

Ad valorem tax continues to be a major source of revenue for local governments in Florida. In 2011 the Ad Valorem property tax revenues in the state were over $250 Billion dollars. In FY 2014-15  property taxes will constitute approximately 40 percent of local governmental revenue, and 32 percent of municipal governmental revenue making it the largest single source of tax or general revenue for general purpose governments in Florida. In addition, the property tax is the primary local revenue source for school districts. In FY 2014, school districts levied $13.4 billion in property taxes for K-12 education.
 
The property tax is important not only because of the revenue it generates, but because it is the only taxing authority not preempted by the Florida Constitution to the state. However, the property tax is not an unlimited source of revenue. The Florida Constitution caps the millage rates assessed against the value of the property. In addition, the Florida Constitution grants property tax relief in the form of valuation differentials, assessment limitations, and exemptions, including homestead exemptions.

Filing for Homestead Tax and Other Exemptions

All legal Florida residents are eligible for a Homestead Tax Exemption on their homes, condominiums, co-op apartments, and certain mobile home lots if they qualify. The Florida Constitution provides this tax-saving exemption on the first $25,000 of the assessed value by the property appraiser of an owner/occupied residence. You are entitled to a Homestead Tax Exemption if, as of January 1st, you have made the property your permanent home or the permanent home of a person who is legally or naturally dependent on you. By law, January 1st of each year is the date on which permanent residence is determined. Click HERE for the legal requirements to obtain the property tax exemption.

Reduction of Ad valorem property taxes

The Florida property tax statutes offers homeowners a way to apply for homestead 'tax' exemptions to reduce local real estate (ad valorem, which means according to value) property taxes. Application is made to the local county property appraiser. This is the homestead "tax" exemption explained in their information and is not the same as the homestead exemption from forced sale or for payment of debts as there are separate and distinct laws dealing with both issues.

Some states such as Alabama, Arkansas, California, Florida, Georgia, Iowa, Louisiana, Minnesota, Mississippi, Missouri, Oklahoma, South Dakota, Texas, West Virginia, and Wyoming permit a property tax credit (for ad valorem taxes) for homesteaded property. In these states owners are allowed to deduct some set amount from their yearly property tax assessments. In Florida the amount is $25,000 in reduction from the county property tax appraiser's 'valuation' amount, with an additional exemption of $25,000, for a total of $50,000.

Florida's homestead property tax exemption reduces the value of a home for assessment of property taxes by $25,000 or $50,000, so that a home which is actually worth $200,000 would be potentially taxed as though it was worth only $150,000. Florida counties are permitted to tax property for up to 3% or less (the lesser amount of the current state Consumer Price Index) of its total value, so a $100,000 home could be taxed $3,000/yr, but the homestead exemption would reduce that burden to about $2,250/yr.

Homestead exemptions are only available on an individual's sole primary, principal residence and home. Therefore, the property tax exemption does not apply to businesses, LLC or Corporate owned property, rental property, second homes or homes with owners that do not claim Florida as their primary residence. However, a Revocable Trust can own property and claim the tax exemption.

Further, the benefits from the "Save Our Homes" amendment do not run with the homesteader or the house. A homesteader that moves will pay taxes on the full market value of the new house for their first year. Acquiring a house that had a homestead exemption does not entitle the buyer to retain its low tax rate from the previous owner. A new application for the exemption must be made, and failure to do so is fatal to any future recourse.

Additionally and more importantly, the Florida homestead exemption caps the rate at which property taxes may be increased. Though local government 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 (Based on the Florida current Consumer Price Index). This means that, as an example only, if an owner had a homestead exemption on a home valued at $100,000 in 1995, and the exemption was still valid in 2015, the most the home could be assessed at is $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 175% from $89,900 in 1995, to $267,000 in 2015.

Supporters of the "Save Our Homes" Amendment contend that it allowed 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. Detractors argued that it created an unfair system of taxation in which first time home buyers, new residents, seasonal residents, and businesses are burdened with more than their share of taxes while homesteaders are trapped in their own homes, often unable to move without doubling their tax rate.

If you are a new homeowner, contact us and let us file your homestead property tax exemption application for you! We can do it for a minimal fee, and without any mistakes in order to reduce the chance of denial or future revocation by the county property tax appraiser.

 

Real Property	Primary Residence	Income - Wages	Asset Protection
Homestead Tax Exemption Filing	Protection of Equity	Protection of Income	Declaration of Homestead
Value Adjustment Board Appeals	Protection from Forced Sale	Protection from Judgments	Protection from Creditors