The Florida Constitution was amended effective January 1, 1995, to limit annual increases in assessed value of property with Homestead Exemption to three percent or the change in the Consumer Price Index, whichever is lower (click here for CPI history). No assessment, though, shall exceed current fair market value. This limitation applies only to property value, not property taxes.
Cap and exemption are removed at the end of the calendar year if the property has been sold. Taxes are then calculated on the full Just/Market Value. The property will benefit from the limitations of the Save Our Homes Cap in the second year of the new owner’s Homestead Exemption. For example, if a property owner applies for and receives Homestead Exemption for 2021, the Assessed Value will be capped in 2022. When determining Taxable Value, exemptions are subtracted from the Assessed Value to reach a Taxable Value. The Taxable Value is then multiplied by the annual Millage Rate to determine the amount of tax due.
A change in property ownership will effectively “reset” the Capped Value to full market value. It is important to know that property taxes will increase the next year as the assessed value must be adjusted to equal the current market value.
The increase due to the removal of the Cap may double or even triple taxes, depending on how long the previous owner had homestead exemption. The table below illustrates this. (For example, if the Millage rate for this fictitious property was 23 mills, then the previous owner would have paid $1,242†, whereas one year later the new owner would pay $2,691†– a substantial increase.)
How the Cap Works when a Property Sells:
| Previous Owner’s CAP | 1st Year of New SOH: | 2nd Year of SOH: | |
| Just Value | $150,000 | $160,000 | $170,000 |
| Assessed Value | $97,000* | $160,000 | $162,240** |
| Less Exemptions | -$50,000 | -$50,000 | -$50,000 |
| Taxable Value | $47,000 | $110,000 | $112,240 |
*(For this example, the previous owner’s Assessed Value has been capped for several years and is therefore significantly lower than the current Just/Market Value.)
**(For this example, Property is capped at 1.4%, cap Rate for 2021.)
† School taxes are not included in the second $25,000 exemption, and must be added back in. The 2020 school millage is 6.4270.
If additions or improvements are made to the property, the value of those improvements will be added to the roll regardless of the cap. For example, if a pool is added to a property, the value can increase no more than the cap rate, plus the value of the pool. If we correct such items as size, number of bathroom fixtures, installation of heat and/or air conditioning, the value of those corrections will also be added to the roll above the cap.
The Tax Estimator can calculate an estimate of taxes for a specific address or for a hypothetical purchase of a property within a particular municipality. In addition, it can simultaneously account for any Save Our Homes portability benefit that may be transferred to a different property while performing a tax estimate. You can also call the Tax Exemptions Department at (727) 464-3207 for this and other valuable information.
The fine print…The cap does not apply to properties that are not homesteaded or are rented. Multi-family properties may qualify based on percentage of use. For example, if you own a duplex, live in one half and rent the other half to a tenant, only 1/2 of your property value will be capped.
The cap remains in effect upon the change of title due to divorce or death of a spouse as long as the remaining owner continues to live on the property as their permanent address.
Portability:
A provision of the Save Our Homes (SOH) Amendment to the Florida Constitution allows homestead property owners to port, or transfer, the accumulated difference between assessed value and the just/market value. The process of moving this SOH differential (or benefit) from one property to another is referred to as Portability. Portability must be applied for and applications must be submitted by March 1st of the year being applied for.
During the November 3rd, 2020 election, voters approved to expand the portability window to three tax years. The information below is designed to provide better understanding of this change to Florida law (effective date of January 1, 2021).
- Time limit to port the SOH benefit to a new homestead property is 3 tax years from January 1st of the last qualified homestead exemption, not 3 years from the date of sale (see time spiral graphic below). Please note that a sale late in a year could reduce the qualifying time window down to as little as 2 years in a worst-case scenario (sale closing on last day of the year). The intent of this legislation was to always provide a transfer window of at least a minimum of 2 years to align with voter perception from when portability originally passed in 2008.
Simple Scenario: if you sell your homestead property in any month in 2020, the homestead exemption remains with that property until December 31, 2020. As the last qualified homestead exemption was January 1, 2020, you now have until January 1, 2023 to qualify for a new homestead exemption and port the SOH benefit to your new Florida homestead property.
Frequently Asked Questions
1. What is the maximum amount that can be ported (transferred)?
$500,000 of value (difference between Just/Market Value and Assessed Value
2. How is the portability amount impacted by an upsizing or downsizing in Just/Market Value?
- Upsizing – if the just/market value of the new homestead is greater than or equal to the previous home’s just/market value, the entire SOH benefit value can be transferred up to the $500,000 limit.
- Downsizing – if the just/market value of the new homestead is less than the previous home’s just/market value, a percentage of the accumulated SOH benefit can be transferred, subject to the $500,000 limit. For example, moving from a property with a Just/Market Value of $300,000 down to one at $180,000 would result in 60% of the SOH benefit amount being eligible for transfer to the new homestead ($180,000 / $300,000 = 6
The Recapture Rule
It is a common misconception in Florida that if your property’s just/market value decreases, that your taxes will also decrease for that year.
Under Florida Law, properties are allowed a limit on the amount the assessed value may increase each year, known as the homestead Save Our Homes (SOH) 3% cap and the non-homestead 10% cap. Overtime, these caps can reduce the amount of property taxes paid as they are calculated on assessed value.
The ’recapture rule’ may apply if the just/market value of the property decreases. The assessed value will still increase by 3% (homestead) or 10% (non-homestead) annually until it reaches the just/market value. Assessed value can never be more than just/market value. When the just/market value increases, the applicable cap will again limit future increases of the assessed value.
This graph illustrates the effect for a homesteaded property with the 3% SOH cap.
More information about the recapture rule can be viewed at Florida Statutes 193.155; 193.1554;Florida Administrative Code 12D-8.006
Frequently Asked Questions About Adding Owners to your Homestead Property
Will I Lose My Homestead Exemption if I add someone to my deed?
Adding names to the ownership of your home normally does not change your Homestead Exemption, BUT you may lose all or part of the protection your property receives from the Save Our Homes (SOH) assessment limitation or “cap”. The SOH cap keeps the assessed value (not the taxes) of your home from increasing more than 3% per year as long as you maintain your Homestead Exemption. A loss of protection from the SOH cap will increase the amount of property taxes you pay.
Will I lose my Save Our Homes Cap if I add someone to my deed?
Maybe, depending on how you own the property (the “tenancy”), and if the new owner files for Homestead Exemption on your property. “Tenancy” is the term used to describe the way property is owned, the relationship between the owners, and what happens to the property when an owner dies. The most common forms of tenancy are: Tenancy by the Entireties, Joint Tenants with Right of Survivorship, and Tenants in Common. If two or more people own property with a homestead exemption, the type of tenancy that appears on the deed can have an effect on the “Save Our Homes” provision, and ultimately the amount of taxes that are owed.
- If the new owner is your spouse, or someone who is legally or naturally dependent on you, he or she must apply for homestead exemption. Your current Save Our Homes cap will not be adjusted.
- Joint Tenants with Right of Survivorship: If the new owner is a joint tenant with right of survivorship, and he or she DOES NOT apply for Homestead Exemption, your SOH cap WILL NOT be adjusted.
If the new owner is a joint tenant with right of survivorship and DOES apply for Homestead Exemption, your SOH cap WILL be adjusted to market value and start anew the following year. In future years, the SOH Cap will protect 100% of the property.
One Important Note! If the new owner is living with you and intends to make the property his or her permanent residence, it may make more sense to apply for the new Homestead Exemption now rather than waiting until a later date. Your Homestead Exemption and SOH cap protects only you, and not the new owner. In the future if you no longer reside in this home, the new owner will have to apply at that time, and the property value and taxes will most certainly be much higher than they are now.
- Tenants in Common: If the new owner is a tenant in common and DOES NOT apply for homestead exemption, your SOH cap WILL BE adjusted to protect only your proportionate or “percent” interest in the property. The “percent” interest of any owner who does not have homestead exemption will be assessed at market value each year.
If the new owner DOES apply for Homestead Exemption, your SOH cap WILL BE adjusted to market value and start anew the following year.
Can Someone “inherit” the Save Our Homes value when inheriting a family-owned property?
Probably not. In general, a person cannot “inherit” another’s homestead exemption or Save-Our-Homes Cap benefit, even if he or she inherits the property. When property changes ownership after the death of the homesteaded owner, the decedent’s exemption is removed at the end of the year. The new owner must file for her own exemption once she has ownership of the home. There are two exceptions which allow someone to “inherit” an existing Save-Our-Homes Cap benefit:
- A surviving spouse may retain the existing Save-Our-Homes Cap — even if the survivor was not previously on title — so long as the surviving spouse subsequently files for homestead exemption;
- The existing Save-Our-Homes Cap may be retained if the person inheriting the property — or being granted a life estate or beneficial rights under a trust — was naturally or legally dependent of the decedent AND was permanently residing on the property at the time of the decedent’s death. (see: Section 193.155 (3), Florida Statutes)
