If you are a homeowner in the State of Florida, you may be eligible for the Homestead Exemption, a tax break that can significantly reduce your property tax obligation. The Homestead Exemption is available to those who own and reside in their primary residence on January 1st of the tariff year. The exemption applies to the first $50,000 of the property’s assessed value, including school district taxes. If the assessed value of your property falls between $50,000 and $75,000, you may qualify for an additional exemption of up to $25,000, which does not apply to school district taxes.
Applying for the Homestead Exemption
To apply for the Homestead Exemption, you must have closed on your property by December 31st of the previous year and declare it as your primary residence by January 1st of the tax year. For example, if you want to apply for the exemption in March 2022 for the 2022 tariff year, you must have owned and resided in the property on January 1st, 2022.
The property appraiser’s values are based on values in January of the year, but the values and millage rates are not finalized and released until August of the year. Taxes are due in November, and discounts are available if paid by then.
Mortgage and Tax Payments
If you have a mortgage with a lower down payment, the mortgage company may collect and pay the taxes for you in November. Sometimes, lenders offer options with larger down payments, such as charging an add-on fee instead of including taxes in your monthly payment. If you pay cash, it is up to you to pay the taxes by November.
The Homestead Exemption and Property Value
While the Homestead Exemption can significantly reduce your property tax obligation, it will not make much of a dent in higher-priced homes. However, the primary advantage of a primary residence is the Save Our Homes (SOH) cap, which limits the annual increase in actual taxes for homestead-exempt properties.
Save Our Homes Cap (SOH)
The Save Our Homes Cap was established by the State of Florida in 1994 and applies to all residential properties that receive the Homestead Exemption.
Assessed Values and Taxes
A good estimate to start is to calculate about 1 1/2 to 2% of the sales price for your base. As of the beginning of 2022, you can see January 2021 values and taxes. Taxes will be assessed in January 2022 but not released until August 2022. Some assessed values increased by 12-14% for 2021 taxes, and sales prices were up 18+% last year, so assessed values can increase substantially for the August 2022 tariff roll as well.
Once the Homestead Exemption is applied for, the cap or base year is established, and each year thereafter, the SOH cap applies. The 3% SOH Cap remains in effect as long as the property is homestead-exempt or until the property is sold.