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Florida’s Homestead Tax Benefits

In addition to the incredible weather and favorable tax environment we enjoy here in Florida, buyers of a Florida residence should be aware of the unique tax benefits resulting from Florida’s homestead laws.

There are two primary parts to Florida’s homestead tax benefits:

  1. Fixed Deduction: There is a fixed deduction of up to $50,000 from the taxable assessed value of a homestead residence (only $25,000 applies to the taxable assessed value for school tax purposes), which deduction has the benefit of reducing county level real estate taxes. Effectively, the tax deduction applies to the first $25,000 and the third $25,000 (portion of the value between $50,000 and $75,000) of a homestead residence’s taxable assessed value.

  2. Annual Cap: There is an annual cap on taxable assessed value increases on a homestead residence, which is the lesser of 3% or the increase in the CPI (consumer price index).

Unlike the homestead laws for protections against creditors that occur as a matter of right, in order to receive the homestead tax benefits under Florida law, an owner of a homestead residence must affirmatively apply for the homestead tax benefits within specific time frames.

In order to enjoy the homestead tax benefits, an owner of a homestead residence must fulfill the following requirements: (a) the owner of a homestead residence must have legal or beneficial title to the residence, recorded in the appropriate public records, prior to January 1st of the year of homestead application; (b) a homestead application must be submitted to the appropriate property appraiser’s office on or before March 1st of the year for which the tax benefit is sought; and (c) the owner of a homestead residence must establish the appropriate Florida county as his or her legal domicile, actually reside in the homestead residence, and be a U.S. citizen or permanent resident.

Once the homestead tax benefit is established, it is automatically renewed each year, unless and until there is a change of ownership, use of the residence (such as renting), or marital status that would affect the qualification of the homestead tax benefit. Changes in the status of a homestead residence may require a notice of change to the applicable property appraiser’s office, and depending on the specific change, the taxable assessed value of the homestead residence could increase to a just market value in the following tax year. Florida law also allows the homestead related property tax benefits to be ported (transferred) to another homestead residence within the State of Florida, but the transfer of the tax benefits will be subject to stringent portability rules.

Additional details on the homestead tax benefits and the forms necessary to file for the homestead tax benefits can be found at the applicable property appraiser’s website. It is important to comply with Florida law with respect to the timing and filing for the homestead tax benefits, otherwise, these important tax benefits could be lost.

© Lawrence Advisory, PLLC (2022)

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