Florida Taxes, The Homestead Act And Filing For An Exemption

Low taxes and the Homestead Act are reasons Florida is one of the best places to retire. 

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When it comes to buying a new home, it pays to know how the local property taxes work. Florida property taxes are similar to those in other states, but there are a number of exemptions available to those who own a home in the Sunshine State that could save you thousands of dollars a year. 

The Florida Homestead Exemption gives residents a discount on their primary home’s property taxes. This law has been a popular policy since the Great Depression, aimed at making Florida a more affordable place to live, work and start businesses. It is so popular, in fact, that in the 1980s, it became part of the Florida state constitution.

People who come to visit the Villages of Citrus Hills often wonder whether the bottom-line cost for all our world-class amenities is within their financial reach. When going over the numbers with potential buyers, we make sure to cover local taxes and the Florida Homestead Exemption with them. We want our newest neighbors to know that when you purchase a home in Florida and make it your official residence,you could be eligible for this property tax exemption even if you own other homes.

Homes in Florida are given an assessed value and homeowners are taxed on this value based on the property tax rate, known in Florida as the millage rate. Local elected officials set these rates for the year based on the budgets they create for municipal and school services. Florida millage rates are set by city and county boards, school boards and special districts.

The Florida homestead exemption reduces the assessed value of a home by $25,000 for the school taxes and $50,000 for the remaining taxes, so this $260,000 home would largely be taxed as if it were a $210,000 home. Here’s a closer look at the numbers.

$260,000 - $25,000 homestead exemption = $235,000 x .007 school millage rate = $1,645

$260,000 - $50,000 homestead exemption = $210,000 x .011 non-school millage rate = $2,310

Total taxes = $3,955

With the Florida Homestead Exemption, this homeowner saves almost $1,000 a year.

If you move to the Villages of Citrus Hills and make it your only home, you clearly are eligible for a homestead exemption. Florida homestead exemptions on property taxes are only available on a person’s primary home, or permanent residence, which is defined as “that place where a person has his or her true, fixed, and permanent home and principal establishment to which, whenever absent, he or she has the intention of returning.”  It does not apply to a rental property, business or second home.

If you decide to keep a home in another state you will need to prove that your home in the Villages of Citrus Hill is your permanent residence.

First, an application must be filed with the Property Appraiser in your county by March 1 of the tax year. As part of the application process, you must show that you’ve made a permanent move to Florida, such as changing your driver’s license or registering to vote in Florida. Some of the other factors the Property Appraiser may consider include a formal declaration of domicile, where your children go to school, where you work, your vehicle registration, federal income tax returns, address on your bank statement and whether you own a home in another state. Once you are given this exemption, you become eligible for other tax savings and in some cases can continue this benefit even if you move to another home in Florida.

As you consider where to put down roots in retirement, there will be a lot to consider, especially when it comes to managing your money. Unexpected costs, like a steep increase in your property taxes, can be a big set-back. In most states, there are no regulations to keep rising taxes in check, but Florida saw the benefit of regulating property tax increases in the state constitution, making the cost of owning a home in Florida a little more affordable and a little more predictable.

As you continue your search, remember that Florida is more than just a beautiful location with great weather. It’s a place where retirement can be enjoyable and affordable.