If you’ve ever bought or considered buying property in Florida, you’ve probably heard of the state’s homestead exemption – and with good reason. The Florida homestead exemption is a powerful tool that reduces the tax burden on the state’s homeowners.
Here’s your guide to using this exemption to maximize the value of Florida homeownership and minimize your tax burden.
What Is the Florida Homestead Exemption?
One of the reasons for the high costs of homeownership in Florida is property taxes. The amount you pay can differ according to the city or even the county. If you already own a home in Florida or are looking to buy one, the Florida homestead exemption can help you to reduce your tax burden.
With the Florida homestead exemption, you can reduce the taxable value of your home by as much as $50,000. It’s offered based on your home’s assessed value and provides exemptions within a certain value limit.
For instance, the exemptions could look like this:
- For the first $50,000 in assessed value of your home, up to $25,000 in value is exempted.
- The above exemption applies to all property taxes, including those related to your school district.
- You pay full taxes on any value between $25,000 and $50,000.
- For any assessed value between $50,000 and $75,000, an additional $25,000 is eligible for exemption, but this exemption does not apply to school district taxes.
- For properties that value above $75,000, you pay full taxes.
Let’s look at some examples to better understand how this might work (see Figure 1):
- $48,000 home: For this home, the first $25,000 in assessed value would be exempt from all property taxes. The remaining $23,000 is assessed value would be taxed normally.
- $70,000 home: For this home, the first $25,000 in assessed value would be exempt from all property taxes. The next $25,000 would be taxed normally. The remaining $20,000 in value would be exempt from all property taxes except school district taxes.
- $90,000 home: For this home, the first $25,000 would be fully exempt from taxes, the next $25,000 would be fully taxed, the following $25,000 would be exempt from all but school district taxes, and the final $15,000 would be fully taxed.
Who Is Eligible for the Florida Homestead Exemption?
While the tax savings could be significant, not everyone is eligible for it. Before you apply for the homestead exemption, ensure that you meet the following requirements:
- You are the property owner.
- The property you want to claim the exemption for must be your permanent residence.
- The property you want to claim should be the permanent residence of someone you can claim as a dependent on your taxes.
- You must have lived at the property on January 1 of the tax year in question. For instance, if you hope to claim the homestead exemption on your 2022 taxes, you must have lived at the property in question on January 1, 2022.
- You should not have rented the property for more than 30 days in a given calendar year. This is because renting the property for more than 30 days for two consecutive years or for more than six months is considered an abandonment of the Florida homestead exemption.
If you’re uncertain whether you meet these criteria, get in touch with your tax preparer or CPA. They can help you understand the details of Florida’s tax code to determine whether you qualify for the homestead exemption.
How Is the Florida Homestead Exemption Calculated?
Every piece of real property has a just value, an assessed value, and a taxable value. The just value is the property’s market value whereas the assessed value is the just value without the assessment limitations. The taxable value is the assessed value minus exemptions and is the value the tax collector uses to calculate the taxes due. The homestead exemption can thus result in exempting up to $50,000 of your home’s assessed value from tax liability.
How to Get the Florida Homestead Exemption?
In order to receive the homestead deduction on your Florida taxes, you have to fill out an application form and demonstrate proof of residence by March 1 of the year for which you wish to qualify. To qualify for the Florida homestead exemption on your 2019 taxes, you must have filed this paperwork by March 1, 2019.
The form you have to complete is DR-501. You have three options for completing and submitting it:
- Complete the form online and select the state’s e-file option.
- Print the form, fill it out, and mail it to Palm Beach County Property Appraiser’s Office, Exemption Services, 1st Floor, 301 N. Olive Ave., West Palm Beach, FL 33401.
- Visit one of the state’s five in-person service centers and complete the form there.
Whether you complete the form online or in person, you’ll be asked to provide proof of your residence in Florida and at the address, you want to claim the exemption for. Examples of documents that might work include the following:
- A Florida driver’s license or state ID
- A Florida vehicle registration number
- A Florida voter’s ID
- Immigration documents, if you’re not a US citizen
- Proof of previous residency in a place other than Florida, plus proof that that residency has ended
- Evidence that you’ve given up a driver’s license from another state
- Declaration of domicile and residency in Florida
- The name of your current employer
- School addresses of any dependent children you have
- A bank statement, plus a mailing address for a checking account
- Proof of payment of utilities at the homestead address
What Do You Have to Do to Keep a Florida Homestead Exemption?
One nice feature of the Florida homestead exemption is that you don’t have to reapply every year. Unless you take action to cancel your exemption, your homestead will be automatically renewed by the state. Sometime after January first in each year, after you’re first approved for the homestead exemption, the state will mail you an exemption renewal.
The flip side of this is that it’s your responsibility to contact the state if and when you’re no longer eligible for the exemption.
You are no longer eligible if one of the following is true:
- The home is no longer your primary residence or the residence of someone you can claim as a dependent.
- You rent the property for more than 30 days per year.
- The home has changed ownership, either because of a sale, divorce, marriage, death, or another event.
It’s important to contact the state if and when you become ineligible to claim the Florida homestead exemption. If you don’t, you’ll be subject to a tax lien, which comes with both interest and penalties.
Can You Get a Florida Homestead Exemption on a Mobile Home?
Some mobile homes can qualify for a homestead exemption. If you own a mobile home and the land it sits on, then you must permanently affix the mobile home to the land to qualify for the exemption. You must pay a $3 fee to the property appraiser to receive a Real Property (RP) decal to mark your mobile home as real property. Mobile homes on leased or rented land do not qualify.
Other Tax Exemptions for Florida Homeowners
The Florida homestead exemption is a powerful way to reduce your property taxes – but it’s not the only tax exemption available to Florida homeowners! Depending on your circumstances, you may also qualify for one or more of the following:
- Construction for an older family member: Added a mother-in-law apartment to your home? You can apply to have that construction reduce the value of your total property. Note: you’ll have to re-apply for this exemption every year.
- Longtime limited-income senior exemption: This one’s a county-by-county exemption and is available only to those who are 65 or older, have lived in Florida for at least 25 years, and have income below a certain threshold. If you meet these criteria and your home is worth less than $250,000, you may qualify for a 100 percent exemption.
- Deployed service member: The amount of this exemption depends on how many days you were deployed during the tax year.
- Disabled veteran: If you’re 65 or older and were injured during combat, you may qualify for this exemption on top of others you qualify for.
- Survival of a spouse killed in military service: Florida’s Fallen Heroes Act outlines the details of this exemption.
- Surviving spouse of a first responder: If your spouse was the first responder and was killed in the line of duty, you may be eligible for this exemption.
- Other disabled people: Various other disabilities (including blindness, permanent disability, use of a wheelchair, and others) may qualify you for a $500 Florida property tax exemption.
One final note: Florida’s property tax exemptions reduce the amount of property taxes you’re responsible for paying; they don’t actually change the value of your property. When you’re choosing a homeowners insurance policy, it’s important to choose one that insures the full value of your home.