Today’s topic is especially important for anyone who bought a home this year: What is the homestead tax exemption, and why is it important?
First, let’s determine what Florida property taxes actually do. Well, they help your city and local officials raise funds. They pay for police, firefighters, schools, roads, etc. Every November, the tax bills come out based on the assessed value of your property.
Now let’s talk about the homestead exemption, what that is, and how it benefits you. First of all, your homestead property is considered your primary residence. Therefore, you can only homestead one property at a time.
The first benefit of the homestead exemption is that you can get a discount on your property tax assessed value. Your tax assessed value is the amount the government can tax you on and is slightly less than your home’s market value. The general rule of thumb is that it’s about 85% of your market value. So for a $100,000 property, your tax assessed value is about $85,000.
Off the top, in the state of Florida, you get a $25,000 discount if you file as a single person and a $50,000 discount if you’re married. So if you have a $50,000 exemption, you reduce that from the $85,000 to get your tax assessed value, and the government can only tax you on $35,000 of that. Also, if you’re a veteran, disabled veteran, or senior citizen, you get additional exemptions. Check with your local property appraiser’s office to see what exemptions you’re eligible for.
The second benefit of the homestead exemption is creditor protection. If for any reason you are sued civilly, they can’t touch your homestead or the equity on that property. So creditor protection is very important.
The third benefit is the 3% cap. In terms of tax assessed value, there is a ceiling on appreciation; even in areas that have appreciated more than 3%, the maximum they can assess you is 3% per year.
We hope this shines a little bit of light on the subject. If you have any further questions, give us a call at (407) 519-0627. We’d love to hear from you.