Property Tax Exemptions Available in Florida

Tue Mar 31 2020

Don’t leave money on the table when you do your taxes this year. Make sure you explore your available exemptions.

Florida Property Tax Exemptions

We wrote recently about how the Florida homestead exemption can help homeowners save money on their taxes by reducing the taxable portion of their homes’ value. There are other ways to save on your taxes as well.

Here, we’ll highlight eight types of property tax exemptions and deductions available in Florida.

Please note that this post is meant to be purely informational and is not intended as advice. If you’re interested in personalized advice about your situation, be sure to consult with a tax advisor.

1. Mortgage Insurance Premium Property Tax Exemption

The mortgage insurance premium property tax exemption is a federal exemption that was eliminated for tax year 2018 but is available once again in 2019 (and will be in 2020 as well). It lets homeowners deduct mortgage insurance payments they made during the tax year.

If you paid mortgage insurance during 2018, you may also be able to amend your 2018 taxes to claim the deduction this year.

Note that there are income limits for who can claim this property tax exemption:

  • If you earn more than $100,000 (as a married couple filing jointly) or more than $50,000 (as an individual filer), the amount of mortgage insurance you can deduct is limited.
  • If you earn more than $109,000 (married filing jointly) or more than $54,000 (individual), you are likely ineligible for this deduction.

2. Mortgage Interest Property Tax Deductions

Another property tax exemption available in Florida (and the rest of the country) is the one you can get by deducting the amount you pay in mortgage interest from your overall taxable income.

Like the mortgage insurance deduction, this one comes with limits. It’s available for interest paid on mortgages for primary residences or second homes, on mortgage loan values up to…

  • $750,000 for a home bought after December 15, 2017 for married people filing jointly.
  • $375,000 for a home bought after December 15, 2017 for those filing as individuals.
  • $1 million for a home bought before December 15, 2017.

The deduction is also restricted to certain types of mortgage loans. You may be eligible only if your loan is…

  • A first or second mortgage.
  • A home improvement loan.
  • A home equity loan.
  • A refinanced loan.
  • A loan used to buy, build, or substantially improve your home.

There’s an additional property tax exemption available to Florida homeowners who received a mortgage credit certificate (MCC) to buy their homes. These homeowners may be able to deduct between 10 and 50 percent of their mortgage interest from their federal return as a dollar-for-dollar deduction, up to $2,000.

This can be a powerful way to reduce your total taxes owed. Note that this is a “nonrefundable” deduction, meaning that the lowest it can take your taxes is $0; you cannot be eligible for a refund based on this deduction.

3. Property Tax Exemptions for Real Estate Costs

In Florida, state and local real estate taxes are typically deductible from your federal tax returns, including taxes you paid at closing if you bought your home during the tax year in question. Other closing costs may also be deductible, including settlement fees (aka points) and prepaid mortgage interest.

Note that the total amount you can deduct for state and local real estate costs is $10,000 for married couples filing jointly and $5,000 for those filing singly or separately.

4. Property Tax Exemptions for Military Members in Florida

Military members and families in Florida have access to several potential property tax exemptions, including these:

  • Mortgage interest deduction: This is available to military members even if you receive a non-taxable military housing allowance. In fact, you can deduct your mortgage interest without reducing your nontaxable allowance.
  • Deployment exemptions: If you were deployed during the tax year, you may qualify for additions to the Florida homestead exemption, depending on how many days you were deployed.
  • Surviving spouse exemption: If you are the surviving spouse of someone who died from causes linked to their military service, you may be eligible for additional homestead exemptions. You may also be eligible for exemptions if you’re the surviving spouse of a first responder who was killed in their line of work. (Details outlined in the “Fallen Heroes Act.”)
  • Disabled veteran exemption: If you’re a military veteran with injuries fully or partly caused by combat and you’re 65 or older, you may qualify for additional property tax exemptions.

If you upgraded your home for medical purposes (e.g., modified cabinets, added grab bars in the shower, added ramps, etc.), the cost of those upgrades that exceeds 7.5 percent of your adjusted gross income may be deducted.

This deduction is somewhat complex, though: if the updates added to your home’s value, you’re only allowed to deduct the difference between the expense and your home’s increased value.

6. Property Tax Exemptions Available in Florida for People with Disabilities

If you have disabilities, you may qualify for a $500 property tax deduction. State law specifically mentions blindness, use of a wheelchair for mobility, and other partial and total disabilities as qualifying conditions for this exemption.

7. Property Tax Exemptions Available to Limited-Income Seniors in Florida

If you’re 65 or older who you’ve lived in Florida for at least 25 years, you may be eligible for up to 100 percent property tax exemptions. There are some limits to this exemption, though, including…

  • You must live in certain areas of the sate.
  • You must have income that falls within certain limits.
  • Your home’s value cannot exceed $250,000.

Even those who don’t qualify for the full 100 percent exemption may qualify for partial exemptions.

8. Property Tax Exemption Considerations for First-Time Florida Homebuyers

While first-time homebuyers in Florida generally have access, as they qualify, to the property exemptions listed in this article, there’s one important note to take into consideration: when you buy a property, your taxes may be higher than the previous homeowner’s or than your neighbors’ because of the way state law works.

Here’s why:

  • Real estate values are appraised in January of each year, and proposed tax notices are sent in August. Taxes themselves are due the following March.
  • Once a homeowner claims the Florida homestead exemption, the Save Our Homes Benefit takes effect. This benefit prevents a home’s appraised value from increasing by more than three percent per year.
  • When a home is sold, previous exemptions are removed, including any Save Our Homes Benefit attached to a previous homestead exemption.
  • While the new owner of the home may reapply for the homestead exemption, the property’s value will be reappraised when they do so; it may be valued at more than the three-percent-per-year cap it was allowed to be valued at prior to the sale.

Depending on the home, the neighborhood, and the length of time the last owners lived there, this could mean a significant difference in property tax bills from one owner to the next. It’s an important consideration for those buying a home.

Other Ways to Reduce Your Property Tax Burden in Florida

Besides applying for exemptions and taking tax deductions, there are two other ways to reduce the amount you pay in property taxes if you live in Florida. The first is to prepay your property taxes.

While property taxes are officially due in March, the state offers the following discounts for early payment:

  • Four percent for November payment
  • Three percent for December payment
  • Two percent for January payment
  • One percent for February payment

If you’re paying property taxes via an escrow account through a mortgage company, they will likely get paid in November, as the state requires November payments from mortgage companies.

The second non-exemption way to reduce your tax burden is to appeal your home’s appraised taxable value. As mentioned above, the state appraises home values in January of each year. If, when you receive that assessment in August, you think the appraised value is incorrect, you can contest the valuation by following these guidelines.

If you win your appeal and the taxable value of your home is decreased, you will likely be responsible for paying less in property taxes.

Learn More About Florida’s Potential Property Tax Exemptions from a Tax Advisor

As we mentioned at the beginning of this article, it’s always smart to talk with a tax advisor or CPA if you’re interested in learning which property tax exemptions available in Florida apply to your situation. Tax law is complicated and may change from year to year as the federal and state governments update laws.

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