Now is the time to purchase a new home if you plan on taking advantage of Florida’s homestead exemption next year!! You will want to make the most of this Buyers Market in the next couple of weeks to benefit up to $50,000 in tax exemptions in 2011.
Realtor friend Maria Norton reminds us that technically part of the Florida Homestead Exemption, the Save Our Homes Amendment goes one step further in protecting homeowners by limiting the annual increase in tax assessment to 3 percent per year for properties that qualify. That means that even if the value of your home suddenly spikes (and hopefully it will) you won’t get hit with an unexpectedly large spike in property taxes, as well. (Home construction and other improvements may disqualify you from receiving the 3 percent limit, so discuss the benefits or drawbacks of such projects before you take them on)
Starting in January 2009, Florida property owners also began receiving this type of protection on their second homes when a law went into effect stating that the rate increase on second properties would be capped at an annual rate of 10 percent per year.
When it comes to the Save Our Homes Benefit, another term you’ll hear a lot is “Portability.” Portability is the ability of a homeowner to retain the benefits they’ve accrued through SOH, even when they move to another home of greater or lesser value.
For instance, logic says that Florida homeowners benefiting from the Save Our Homes benefit are paying less-than-market value for the property taxes on their homes, as the amount they pay each year is capped (unlike taxes in the open market). As such, it’s natural to assume that some residents would be reluctant to move and take on higher property rates, along with a potentially higher mortgage.
To prevent that, Portability allows you receive a similar benefit on your new home, even though it’s assessed at current market value. Pretty cool, right? The amount will vary depending on the value of your new home, and whether you are upsizing or downsizing on your move. (If you’re upsizing, you’ll be able to keep the entire benefit. If you’re down-sizing, you’ll receive the same percentage of the benefit applied to the new home’s value.)
Time to make your move…