Homestead Exemption in Florida
YOUR GUIDE TO FLORIDA HOMESTEAD IN NAPLES AND SOUTHWEST FLORIDA
What is Homestead in Florida?
Property can qualify as a homestead (and for a homestead exemption), if you’re a Florida resident and the home is your primary residence. Because you’re not paying property taxes on the home’s full value, the total amount you pay is less than you would pay if the house were a second home, rental property, or a vacation home.
One of the major advantages of homesteading your property in Florida is that you get an automatic $50,000 tax exemption, which is a deduction off the assessed value of your property.
If you are looking to purchase home for $500,000, the property appraiser is usually going to assess the value at around 85% of your purchase price, which brings you to $425,000. When you subtract your $50,000 exemption which is offered to you as our primary residence in Florida, and now you’re working with a tax basis of $375,000. We used something called millage as the rate to calculate the property taxes, and that is 1/10th of 1 percent, or $1 dollar for every $1,000 in assessed value. The current millage rate in Collier County is 10.8084 or 1.08% of the assessed value (which is really low), after homestead deduction, and that is what you would owe in property taxes. If you multiply the $375,000 x .0108084, and your first year taxes would be $4,053.15 on your $500,000 purchase. Just to run through the same scenario through Lee County, you will use their current millage rate which is 14.2544. Why is Lee County’s millage rate so much higher? That is a common question, and that will have to be another video where we discuss how counties create their budgets, and form their tax rates. Anyway, if you take the $375,000 assessed value, after the Homestead Deduction, and multiple by Lee County’s millage rate .0142544 and your first year taxes will be approximately $5,345.40.
Homestead exemption makes a considerable difference, even though our property taxes in Collier and Lee Counties are already pretty low.
But, the benefits certainly do not stop there!
Here comes perhaps my favorite provision regarding property taxes in Florida, and it is called Save Our Homes (SOH). The Florida Constitution was amended effective January 1, 1992, to limit annual increases in assessed value of property with Homestead Exemption to three percent 3%, or the change in the Consumer Price Index, whichever is lower. While a 3% cap sounds awesome, the change in the CPI this year was less than half that at 1.4%, last year it was 2.3%, and the year before it was 1.9%. So, what that means is that, even though property values are increasing at a record rate, the assessed value of your property used to calculate your taxes, cannot increase by more than 1.4% this year if you have filed for Homestead, which to me is just incredible.
Can it possibly get any better?
I want you to picture in your mind as you own this property for a couple years, the market value of your property increasing fairly rapidly each year, compared to the very small increase in assessed value that is allowed to happen as a result of Save our Homes. As those two lines get farther apart, the space between those lines is a chunk of value that you do not pay property taxes on, and that chunk should keep getting bigger and bigger the longer you continue to enjoy living in Southwest Florida. Well, what would happen if you decided, at some point, for whatever reason to purchase a different home? It sure would be a shame to lose all that untaxed value you have built up over the past couple years. Another element of the Save of Homes Amendment is called “portability”, which allows you to take that chunk of untaxable value that you have built up, and move it to another homestead in Florida.
The amendment allowed you to transfer this accumulated benefit to a new Florida home within 2 years, but in the November 2020 election, Florida voters approved the expansion to a 3 tax year timeline to port your benefits to your new Florida homestead property. It is important to note that it is 3 years from the January 1st of the year you sold your homestead property…not 3 years from the date of the sale. This value can be “ported” to a new homestead whether you are upsizing or downsizing your homestead, and it works like this.
The difference between your market value, and your assessed value is the portability that you do not pay taxes on. You can move up to $500,000 of that benefit by way of “portability into a new homestead. If the market value of your current homestead is $400,000, and the assessed value is $250,000, the difference is $150,000. Let’s say you move into a new home of equal or greater value, then you would take the entire value to your new home. This is your portability savings.
Now, if you move a home of lesser value, it’s a little different. You would take a percentage of the portability savings to the new home. Using the same example, you figure out the percentage of the benefit to bring with you resulting in 37.5% or $75,000 of benefit that you port to your new home.
Your portability benefit is a one-time, permanent reduction in your new home’s assessed value. And you can use this portability an unlimited number of times when you move in Florida.
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HOW DO YOU DETERMINE IF YOU QUALIFY FOR HOMESTEAD?
In order to homestead your property in Florida, you need to be residing in the property on the January 1st after you purchase the property, and you must apply for the homestead exemption no later than February 28th of that year. It’s not automatic. You have to take the step of formally applying for the exemption using the DR-501 Form.
After you do that, it will automatically reapply each year until you terminate your homestead.
**You may pre-file for the following year from March 2 through December 31, so after you purchase a home that will be your primary residence, I always recommend you pre-file your homestead exemption for the next year.
In order to maintain your homestead status, you must remain residing in the property. You will lose the homestead status if you ever rent the property.
Additional Savings Beyond the Homestead Exemption
The state of Florida has additional exemptions that can qualify some property owners for extra savings.
If you’re a widow or widower, an exemption of $500 may be available to you if you’re a permanent Florida resident.
People with a permanent disability, including people with paraplegic and hemiplegic, can qualify for an exemption as long as their gross income from the prior year doesn’t exceed Florida law‘s annual limitation. However, quadriplegic persons aren’t subject to income limitations for a disability exemption.
A service member with an honorable discharge and a service-connected disability can qualify for an exemption on real estate under certain conditions. Additional exemptions are available for:
First responders
Active duty military members
Veterans
Surviving spouse of a veteran
Blind persons
Seniors
WHAT DO YOU NEED TO APPLY FOR HOMESTEAD IN FLORIDA?
All of the following items are required as proof of legal residence:
Evidence of ownership (deed, tax receipt, etc.)
Social Security numbers for all applicants and spouses; as required by F.S. Section 196.011(1)
Collier County Voter Registration (if you vote) dated prior to January 1st. If you are not a voter, you may file a Declaration of Domicile with the Clerk of the Circuit Court prior to January 1st of the year of application.
Florida Driver License dated prior to January 1st
Florida Vehicle Registration dated prior to January 1st
Additional information may be necessary:
If not a U.S. citizen, a resident alien "green" card.
If your property is held in trust, a complete copy of the trust agreement.
If your residence is a mobile home, the real property decal number and a copy of the registration or title to the mobile home.
If you or your spouse benefitted from a residency based exemption on an out of state property, a document from that government office stating the exemption has been removed will be required.
When and Where to File:
New applications for Homestead Exemption (FORM DR-501) for the current year must be made in person prior to March 1st at the Property Appraiser’s office or at select locations during the regular homestead filing period. If you are a resident of Lee County, you may file online by visiting https://leepa.org/Homestead/ApplyForHomestead.aspx
Remember, If you move, you must file a new application for homestead at your new residence. It does not automatically transfer.
Collier County Locations:
Main Office:
3950 Radio Rd., Naples, FL 34104
Open Mon-Fri 8-5
239-252-8141 tel
239-252-2071 fax
Orange Blossom Office:
2335 Orange Blossom Dr., Naples, FL 34109
Open Mon-Fri 9-6
239-252-4444 tel
239-252-5984 fax
Golden Gate City Office:
4715 Golden Gate Pkwy., Naples, FL 34116
Open Mon-Fri 9-1, 2-6
239-252-8193 tel
239-348-3590 fax
Lee County Property Location:
2480 Thompson Street, 4th Floor, Fort Myers, FL 33901
Open Mon-Fri 8:30-5:00
888-721-0510 tel
Exemptions@leepa.org
www.leepa.org
WHAT TO DO IF YOU MOVE TO A DIFFERENT HOME IN FLORIDA?
Simply File The FORM DR-501T at all the same locations as above, and online in Lee County by visiting https://leepa.org/Homestead/ApplyForHomestead.aspx
HOW TO KEEP YOUR HOMESTEAD?
I told you we would talk about this. We have spoken with a couple folks that inadvertently “lost” their homestead in Florida for a couple different reasons. I have also read about residents that have lost their homestead in Florida for other reasons.
1. One of the assumptions of your homestead, is that this is your primary residence. I have spoken to folks in Collier and Lee County who lost their homestead status because they rented their property. Of course, once the homestead has been removed, there are going to be back taxes due immediately, along with penalties.
2. Another case involved a spouse who owned a considerable property in New Jersey where they were still claiming homestead. It is extremely important to relinquish homestead status in other states. Not only does this cause issues with homestead in Florida, taxes and penalties due, etc., but also issues and penalties due to another state who believes you are a primary resident of that state, not Florida.
3. Maintain or obtain a driver's license in any other state. A driver's license is residency based.
4. Fail to register a vehicle in Florida if you drive it here.
5. Are registered to vote in another state.
That’s It! I hope this has been valuable for you, and I hope you now understand the incredible benefits of being a Florida Resident, and how to apply for and maintain Homestead in the State of Florida.
Of course, we are always here and happy to answer any questions you may have however, We are not tax attorneys, and We recommend questions to be directed directly to the Lee and Collier County Property Appraiser’s offices, or the Florida Department of Revenue. Thank you as always for reading our guides, and let us know if there is a specific topic you believe would be helpful for us to create to help others move to, and enjoy living in beautiful Southwest Florida!
Please also check out our latest Naples and Southwest Florida Relocation Guide, and learn How to Win at the Offer Table in today’s incredibly competitive real estate market.
If you are going to be financing a portion of your purchase, we highly recommend you get early start with a lender (preferably local), and make sure they are aware that, when you are out looking at homes, you will need customized pre-approval letters very quickly, specific to any particular property you want to make an offer on.
Questions About Homestead in Florida
How do you qualify for homestead exemption in Florida?
1. You must own AND occupy the home as your PERMANENT residence prior to January 1st of the year for which you are applying
2. You must be a US Citizen or permanent US Resident and a Florida resident as of January 1st
3. You cannot be claiming or receiving any type of tax exemption on any other property in the U.S.
4. You must complete an exemption application online (in some Counties) or in the County Property Appraiser’s office by the statutory deadline of March 1st .
What is a homestead property in Florida?
The Florida Constitution defines homestead as real property to the extent of no more than one half of an acre of contiguous land in a municipality, owned by a natural person, and the improvements on it. Art. X, §4(a), Fla. Const. The owner must “have made or intend to make the real property his or her permanent residence or that of his family”.
What are the benefits of homesteading in Florida?
The Florida homestead exemption is an exemption that can reduce the taxable value of your home by as much as $50,000.
You also benefit from Save Our Homes which says that the assessed value of your home can only increase 3% (or the annual change in the Consumer Price Index-CPI) whichever is less.
You also benefit from portability which means you can bring your non-taxable benefit to another home in Florida.
How much does FL Homestead reduce taxes?
The Florida homestead exemption is an exemption that can reduce the taxable value of your home (the assessed value) by as much as $50,000…..The first $25,000 of thee value of your home is tax-free, the next $25,000 is taxed at the normal millage rate, and $50,000-$75,000 of the value of your home is free of non-school taxes.
