Most Florida homeowners save money yearly on property taxes through Florida's Homestead Exemption. But, not every homeowner is aware that accumulated savings can be transferred to a new homestead if you move from a previous Florida homestead to a new one.
After the first year a home receives a homestead exemption, the property appraiser assesses the home at "just value", which is also called Market Value by Collier County's Property Appraiser. In future years, any change in assessed value of the homestead is limited to the lesser of 1) 3% of the assessed value of the property for the prior year, or 2) the percentage change in the Consumer Price Index (CPI).
Over time when property values increase, a sizeable difference between the just value and the assessed value will develop. This accumulated difference between your assessed value and the just (market) value is your "Save Our Homes" (SOH) benefit, and has "portability". In a real estate market such as Naples, FL, just values can increase rapidly, and that differential can become substantial. The following is an example of how such a differential can develop:
Portability allows most Florida homestead owners to transfer this differential, their SOH benefit, from their old homestead to a new homestead, lowering the tax assessment and, consequently, saving hundreds if not thousands of dollars in taxes for the new homestead.
- You must establish a homestead exemption for the new home within two years of January 1 of the year you abandoned the old homestead (not two years after the sale).
- Maximum differential transferable is $500,000 for married; $250,000 for single.
- File the Transfer of Homestead Assessment Difference (Form DR-501T) with the homestead exemption application. The deadline to file these forms is March 1 in the county where the new home is located. In Collier County, these forms are available and should be filed at the Collier County Property Appraiser office at 3950 Radio Rd, Naples, FL 34104. Their phone number is (239) 252-8141.
Let's imagine an ideal scenario. Mr. and Mrs. Walker purchased their lovely home in the Moorings in 1989 for $160,000. After 26 amazing years, they decided they wanted to downsize, and purchased a beachfront condo. The Market Value of their home over the years increased to $1,105,000, while under the homestead exemption, the Assessed Value only increased to $414,000. This means the differential, or their "Save Our Homes" benefit, is $691,000, and $500,000 of that would be transferrable to the new homestead. Their new beachfront condo was assessed by the property appraiser, and given a Just Value of $890,000, but with the transfer of their homestead assessment difference, and including the homestead exemption, the taxable value of their condo is only $340,000, saving them thousands of dollars in taxes each year!