PART 2 – The Exemption
In Part 2 of our Homestead series, we briefly discuss what the Florida homestead tax exemption is in practical terms as how it applies to your home’s assessed property value.
Recap
As a recap, the Florida homestead exemption reduces the taxable value of your home by as much as $50,000. In other words, depending on the applicable exemption, you are not taxed on the exempt portion of your property’s assessed value.
Well, what is exempt?
I will try to simplify the application of homestead exemption to the assessed value of your home, but bear with me because for some people this can be straight forward but for other people this can be complex!
The Florida homestead tax exemption provides two general exemptions. First, $25,000 exemption, and a second $25,000 exemption if the property value exceeds $50,000. In practical terms, the exemptions apply as follows:
- First $25,000 exemption: On the first $50,000 in assessed value of your home, $25,000 is exempt from all property taxes. Meaning you pay full taxes on any the value between $25,000 and $50,000 on your homestead property.
- Additional $25,000 exemption: For any assessed value between $50,000 and $75,000, an additional $25,000 is eligible for exemption, however this additional $25,000 is not exempt from school district taxes.
- For any value above $75,000, you pay full taxes.
Wow, what does that mean? I know, homestead laws can be difficult to understand. Here are examples on how this works in application:
- $43,000 home: the first $25,000 in assessed value would be exempt from all property taxes. The remaining $18,000 in assessed value is taxed normally.
- $63,000 home: the first $25,000 in assessed value would be exempt from all property taxes. The next $25,000 is taxed normally. The remaining $13,000 is exempt from all property taxes except school district taxes.
- $93,000 home: the first $25,000 in assessed value would be exempt from all property taxes. The next $25,000 is taxed normally. The next $25,000 is exempt from all property taxes except school district taxes. And the remaining $18,000 in assessed value is taxed normally.
Just Value vs. Assessed Value vs. Taxable Value
In this discussion above, the term assessed value is mentioned often as the value that the exemptions are applied to. Why is that?
Property Appraisers across the difference counties in Florida assess property values in their county for determining the taxable value of a property. The taxable value is used to calculate the taxes due by each property owner.
The Just Value of a property is essentially the property’s market value. It is based on market information including sales of comparable properties.
The Assessed value is the property’s Just Value after being limited by the Save Our Homes Cap or 10% Cap on annual increases, such as the Save Our Homes Cap or the 10% assessment cap on non-homestead properties, more on this below.
The Taxable Value of a property is the Assessed value minus any exemptions which are applicable. This is the true number that taxes are calculated with.
Homestead Exemption vs. Assessment Cap
The Save Our Homes Cap, voted into law January 1, 1995, limits the annual increase in assessed value of property. This cap limits assessed value increases of homestead property to a maximum of 3% per year, or the Consumer Price Index, whichever is lower. The Non-Homestead Cap applies to all non-homesteaded property regardless of property type, and limits increases in assessed value to a maximum of 10% annually. In the year following a transfer of ownership, Just Value and Assessed Values will be equal because the assessment and caps are reset.
In conclusion
As you can surely see, there are many moving parts to navigating Florida’s Homestead laws. If you are interested in finding out more about Homestead laws and their application to your situation or circumstances contact our office to schedule an appointment and have one of our attorneys review your matter.
Click here for Part 3 in the Homestead Series!
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