FLORIDA HOMESTEAD | ONE ISSUE IS REALLY TWO! | Ross Law

FLORIDA HOMESTEAD | ONE ISSUE IS REALLY TWO!

I love this topic. No, really, I love talking about and explaining how Homestead works.

BECAUSE SO MANY PEOPLE GET IT WRONG.

Note: The pictures below are links to bring you to specific parts of the larger video so that you can watch just those areas.

This is NOT “6 Months & A Day”. The “six months and a day rule” or “183-day rule” generally refers to a taxation principle related to the residency status of individuals in a particular area. The specific details of the rule can vary from one location to another, but the core concept is that if an individual stays within a particular area for at least six months and one day (or 183 days) during a tax year, they may be deemed a tax resident of that area and subject to its tax laws. This determination of tax residency can have significant implications for an individual’s tax obligations and liabilities.

Florida does not have an income tax, and therefore this rule does not apply to our Homestead laws. Instead, A person who has the legal title or beneficial title in equity to real property in this state and who in good faith makes the property his or her permanent residence or the permanent residence of another or others legally or naturally dependent upon him or her, is entitled to an exemption.

Good faith effort. From my experience, the time that you spend here is not a major factor.

MILLAGE RATES MATTER. Both Collier and Lee County have great tools for calculating your estimated property taxes – use them! In fact, oftentimes my clients will get confused about their property taxes when comparing them to their neighbor or even the seller.

The tax itself expresses the MILLAGE RATE as the result of dividing the approved taxing district’s budget for the tax year by the related, taxable value. The millage rate is translated as a rate per $1000. of taxable value. For example, if the millage rate is 9.00 (.009 x $1000) a taxable amount of $1,500,000 would equal $13,500. in taxes.

Adding on the Homestead, and the Safe Our Homes exemption that you have be entitled to, will act to reduce that even further.

WHY ARE MY TAXES DIFFERENT THAN MY NEIGHBOR?

Your neighbor may have filed and qualified for the Homestead Exemption at an earlier date than you did. Consequently, they started at a lower assessed value when their 3% cap was initially applied. The Save Our Homes (SOH) cap limits assessed value of Homesteaded properties to an increase of no more than 3% per year regardless of how high your market value increases. Over the long term the gap between your market and assessed value increases allowing your SOH exempt value to grow. SOH exempt value is value you do not pay taxes on. If you purchased your home more recently or filed for Homestead at a later date than your neighbor you will see a difference in assessed values and ultimately, tax amounts.

Collier Tax Estimator

Lee Tax Estimator

LEARN ONE THING? Ideally, every person would like to have both the Florida Homestead exemption AND be considered a Florida resident for tax purposes. But until that is possible, I would highly recommend that every homeowner at least consider applying for the exemption. The benefits include:

Up to $50,000 exemption in the assessed value of your home for tax purposes;
Creditor protection. This protection includes prohibiting creditors from forcing the sale of the home to satisfy a debt.

You may still owe income taxes in your original state, but the Homestead exemption may still be worth doing.

If you found this video interesting, or if you have more questions about the topic, please reach out to me and let us know. As always, I would love to work with you on your next closing. Please call or email me if I can help in any way.