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If you are a new home buyer…
Be aware that there could be significant changes in the property taxes on the home you are buying.
In Florida, state law limits the annual increase in the assessed value, not market value, of homesteaded property to 3% or the Consumer Price Index (CPI) whichever is less. This is also called Save Our Homes. When homesteaded property is sold, that limitation is removed and the property is reassessed. This results in a new assessed value.
If you purchase homesteaded property, the taxable value of the property can and probably will, increase the first year after sale, especially if it has been owned and homesteaded for several years by the same owner.
Assessed Value – Any Exemptions = Taxable Value
This information is very important to understand because if your taxes are paid by your mortgage company, you may be surprised by the increase in your monthly payment, due to the increase in your assessed value, which means a higher taxable value.
When there is a change in ownership, the assessed value will be brought up to the market value. This may include a name change on your deed. According to Section 193.155(3)
Florida Statutes, except as provided therein, property shall be assessed at just value as of January 1 of the year following a change of ownership. Therefore, adding or removing the name of an individual as a joint owner of the property can require the property’s assessed value to be reassessed at market value as of January 1 following the change of ownership if the new owner files for Homestead Exemption.
What is the Save Our Homes Amendment?
Section 193.155(1) of the Florida Statutes was enacted to implement an Amendment to the State Constitution to limit annual increases in property value assessments on real property qualifying for and receiving Homestead Exemption.
How does the amendment limitation apply?
Real property shall be assessed at full market value (just value) as of January 1 of the year in which the property first receives the Homestead Exemption. The following year the property is reassessed and any changes from the prior year’s assessed value is not to exceed the lesser of 3% of that prior year assessed value or the Consumer Price Index percentage change, (except capital improvements, additions or improvements).
How is my property affected?
The year following the granting of Homestead Exemption, the property is subject to the limitation.
What about any changes, additions or improvements to the homestead property?
New construction or additions shall be assessed at full market value as of the first January 1 after the changes are substantially completed. In these circ*mstances, it is possible that the assessed value may exceed the amendment limitations. However; after the first year that the changes are assessed at full market value, they are also subject to the amendment limitations.
What properties are not subject to the limitation?
Residences without homestead, non-residential property, vacant land, tangible personal property, commercial property, and agricultural property are not eligible for the amendment limitation.
Why would my assessment increase when my market value stayed the same?
This is probably due to the “recapture” rule. In 1995, the Department of Revenue adopted a rule, approved by the Governor and Cabinet, directing Property Appraisers to raise the assessed value of a qualifying homestead property by the maximum of 3% or the Consumer Price Index, whichever is less, on all properties assessed at less than full market value (just value).
What happens if a property is sold or conveyed to a new owner?
Once the property has been conveyed to the new owner (and the Homestead Exemption is interrupted), it is raised to full market value (just value) January 1 of the following year. The new owner must qualify and apply to receive Homestead Exemption. Even if the property received a homestead exemption under the previous owner, the limitation, just like the exemption, expires January 1 of the year following a change of ownership.
Assessment Cap for Non-Homestead Property
Non-Homesteaded properties have a 10% assessment cap (similar to Save Our Homes). Most residential properties will be assessed at just value when they are sold; commercial properties and residential properties with 10 or more units will be reassessed after a significant improvement has been made or a change in ownership occurs. The assessment cap does not apply to school taxes.
