Unlocking the Power of Portability and Homestead: Navigating Property Taxes and Unveiling Hidden Protections

Download Homestead Portability Notes

Homestead Presentation

Use TitleAdvance to be the most prepared agent, win the listing, and check out the property before you walk into the listing appointment.

There are 3 benefits of Florida Homestead:

• Protection from judgment creditors
• The $50k deduction from the value
• A 3% cap on the increase in taxable value, Save Our Homes Constitutional Amendment 
  • This is where portability comes from
  • The cap can be less than 3% also, it can be the CPI if its less than 3%

3 elements to qualify for Florida Homestead protection

• Live there on January 1
• Primary residence 
• Apply before March 31

What defines primary residence and residency 

• Reside with the intent to permanently live there
• FL driver’s license, or if no license, evidence you relinquished your license
• FL vehicle registration 
• Voter ID card 
• Address on your US Tax Return
• Must be a US citizen or qualified permanent resident
• Where your employer is located (obviously thought up pre-covid)
• Declaration of domicile
• Address of school children attend 
• Bank statement addresses
• Utility bill addresses 

Can only have one primary home.

• Spouses can’t have separate primary homes
• You can’t have a primary in another state and Florida

There are a ton of other Homestead Exemptions besides the 3 above

• Older than 65 on limited income
• Widowed, blind, disabled
• Line of duty disabled first responder, or surviving spouse of same
• Disabled vet, or surviving spouse of the same

How is market value determined?

• Typically Market value is 85% of the purchase price 
• Appraiser assumes average condition, arm’s length
• Many realtors tell their clients the purchase price is the taxable value.  This is not the case.  
• The comps for the year the property is purchased shall be the measure of value.  
• Why 85%, so taxes are not paid on commissions and closing costs 
• Values are accessed as of Dec 31 on the year you apply 

Homestead Portability  

Basics

It’s hard to find the exact data, but it’s believed as many as half of all FL sales are eligible for portability, but roughly only half get it, and that equals about $5bill in missed tax savings. 

• Portability came into being in 2008, part of Save Our Homes Constitutional Amendment. 
• Portability is separate filing from the homestead.
• Some get it automatically, many do not.  I get the calls from the “don nots”.  
• Unlike homestead, there are no filing deadlines, a homeowner can apply at any time.  But, you can never get back missed portability from prior years.
• Applies to a move anywhere in the state.  
• Before you sell, make sure the market value is as high as possible.  This maximizes the amount that can be taken to the new property
• Best portability explainer I’ve found. Please note it’s for Pinellas County. https://www.pcpao.org/SOH.html
• Super easy to apply for.  Portability application form DR-501T  https://www.pbcgov.org/papa/pdf/HXAssessmentDiff.pdf 

“Apportionment”, the little-known secret

Did you know if divorcing parties sell their home they can assign the portability rights between them?  They can actually take the capped value, and assign it between them just like any other marital asset.

What does that mean?  Let’s say for example, a divorcing couple is selling their Homestead home, and there is a $500,000 portability benefit available to them on their next Homestead purchased.  In this example the portability benefit has an approximate value of $10,000 a year, so overt the next 3-5 years (the average period home ownership), that could be worth about $30,000-$50,000.  Now let’s say one divorcing party wants to rent and one wants to buy.  The party that wants to buy could have the renting party assign the portability benefit to them, have a smaller tax burden, and potentially afford more home.  

In other words, portability is another marital asset to be divided between the parties, that can enable one party to buy more home and have less taxes.  

This is another tool you can use to distinguish yourself from other realtors in this hyper-competitive market.  And if you ask 10 other realtors if they are aware, I’d bet all 10 say no.  I’ve asked family law attorneys if they are aware, and almost all said no.