Florida is known for being a popular vacation destination. However, it also makes a great place to put down some roots! One of the major draws to calling Florida home is the Florida homestead exemption. This tax exemption offers tax breaks to those that call the Sunshine State home!
How It Works
The Florida homestead exemption provides a property tax reduction to Florida homeowners. The tax exemption is applied sequentially. The amount exempt depends on the assessed value of the property.
- The first $25,000 of the property value is exempt from all taxes.
- The following $25,000 is fully taxed. If the property is not valued at $50,000, then only the remaining amount after the initial $25,000 is taxed.
- If the property is valued between $50,000 and $75,000, then an additional $25,000 is exempt from all taxes except for school district taxes.
- Any amount of value over $75,000 is fully taxed.
The following examples demonstrate the tax exemption of varying property values.
A home valued at $42,000 will be exempt from the first $25,000 worth of assessed value. The remaining $17,000 will be taxed normally.
A home valued at $68,000 will be exempt from the first $25,000 worth of assessed value. The following $25,000 will be taxed normally. The remaining $18,000 will be exempt from all but school district taxes.
A home valued at $85,000 will be exempt from the first $25,000 worth of assessed value. The following $25,000 will be taxed normally. The following $25,000 will be exempt from all but school district taxes. The remaining $10,000 will be taxed normally.
Determining Property Value
If the property is residential, then the value of the property is estimated based on the sale price of similar properties in the same area. If the property is income-producing, then the value of the property is estimated based on how much revenue it is expected to generate, the sale price of similar properties in the area, and how much it would cost to replace the property.
Who is Eligible?
In short, only permanent Florida residents are eligible for the Florida homestead exemption. However, there are specific requirements that a Florida resident must meet to receive their tax exemption.
- The property being claimed as eligible for tax exemption must be your permanent residence or the permanent residence of a person being claimed as a dependent on your taxes.
- You must have lived on the property on January 1st of the tax year.
- The property cannot have been rented for more than 30 days over the course of 12 months.
To receive the Florida homestead exemption, you must have completed the DR-501 form and provide proof of residence no later than March 1st of the year in which you wish to be exempt. Proof of residence can be presented using any number of documents including, but not limited to:
- A Florida driver’s license or state-issued ID
- A Florida vehicle registration number
- A Florida voter’s ID
- Immigration documents (if you are not a US citizen)
- Current employer information
- A bank statement with the mailing address for the checking account
- Proof of utilities payment
The Florida homestead exemption is a great opportunity for anyone wishing to make Florida their permanent residence. Are you looking to buy or sell a Florida home? Contact the team at Posh Properties to help you with your real estate goals!