Earlier this year voters approved new laws that change the way our homestead exemptions work. The changes affect how the county tax appraiser calculates the amount of taxes owed on your property, and in many cases will reduce the amount you owe. As part of these changes the Save Our Homes exemption is now transferable to your new homestead, making your tax bill more manageable when you buy a new home.
If you already have a homestead exemption there is a 3% limit on the amount your home’s “taxable value” can increase each year. Obviously the market does whatever it wants, but the difference between the actual appreciation and the 3% limit is tracked as a Save Our Homes deduction. The amount that builds up in this category is subtracted from your property’s value and you pay less tax each year than you would have without the deduction. There are properties in Alachua where the taxable value is half or less than the actual value because the owner has lived in the home for many years.
In the past when you moved to a new home the Save Our Homes deduction restarted at $0, and anything that built up in the old home disappeared. The law that was passed this year changes that. Starting in 2008 the amount you have built up under Save Our Homes may be portable.
All or part of the Save Our Homes deduction is portable, depending on whether you are buying a more or less expensive home. To qualify for portability you have to file a homestead exemption at your new home, and also file a transfer request. If you are moving to a more expensive home you can generally apply the entire Save Our Homes amount to your new home. If you are downsizing the appraiser will calculate what percentage of you home’s value the Save Our Homes deduction represents and apply that percentage to the price of the new home.
Many people who have owned their homes for several years can see an immediate benefit if they have been thinking of moving. Prior to this change buying a new home almost always meant facing a larger tax bill – sometimes two or three times larger. With Save Our Homes portability many people can carry their tax advantage to a new home so they are no longer trapped in their homes by the threat of a large tax bill.
Very interesting essay. Have there been any court challenges to the new law to date? I ask because in the run up to the election, there were Op-Ed worries that the law would be found unconstitutional.
There have been questions over the years about homestead in general, but I haven’t heard of any court decisions about the new portability yet. (There are a couple law suits out there)