Explain Florida’s “Save our Homes”
What is “Save Our Homes”?
“Save Our Homes” is a program in Florida designed to help homeowners by limiting how much their property’s assessed value can increase each year for property tax purposes. This program was established to make property taxes more predictable and manageable for homeowners. When you move, you can transfer these savings to your new home, continuing to benefit from lower property taxes.
Key Components of “Save Our Homes”
- Assessment Cap: The assessed value of your home can only go up by a maximum of 3% per year or the rate of inflation, whichever is lower, regardless of how much the market value increases.
- Tax Savings: Over time, as the market value of homes increases more quickly than the assessed value, the gap between the two grows. This gap represents your “Save Our Homes” tax savings.
How “Save Our Homes” Tax Savings Work
- Initial Assessment: When you buy a home, its assessed value for property tax purposes is usually set close to the purchase price.
- Annual Increases Capped: Each year, the increase in the assessed value of your home is capped at 3% or the inflation rate (whichever is lower), even if the market value of your home increases by a larger percentage.
- Accumulating Savings: Over time, the difference between your home’s market value and its assessed value grows. This difference is your accumulated tax savings because you are paying taxes on a lower assessed value.
Example of “Save Our Homes” Tax Savings
- Year 1: You buy a home for $200,000. The assessed value for property taxes is set at $200,000.
- Year 2: The market value of your home increases to $220,000, but the assessed value can only increase by 3%, so it’s $206,000.
- Year 3: The market value rises to $240,000, but the assessed value only goes up by another 3% to $212,180.
In this example, even though the market value increased by $40,000 over two years, your assessed value only increased by $12,180, saving you from higher property taxes.
Portability of “Save Our Homes” Tax Savings
When you sell your home and buy a new one in Florida, you can transfer your “Save Our Homes” tax savings to the new home. This means you can continue to benefit from the lower assessed value, reducing your property taxes on the new home.
What Does Transferring “Save Our Homes” Tax Savings Mean?
When you sell your home and buy a new one, you can transfer the tax savings you accumulated under the “Save Our Homes” cap from your old home to your new one. This process is known as “portability.” It ensures that you don’t lose the benefits of the lower tax assessment you’ve enjoyed over the years.
How Does Portability Work?
- Sell Your Current Home: When you sell your home, you determine how much you’ve saved under the “Save Our Homes” cap. This is the difference between the market value of your home and the capped, assessed value.
- Buy a New Home: When you purchase a new home, you can apply the savings (the difference) to the new home’s assessed value, effectively lowering the amount of property tax you owe on the new home.
What Did Florida Amendment 5 (2020) Change?
Before Amendment 5, you had two years from the time you sold your old home to buy a new one and transfer the tax savings. Amendment 5 extended this period to three years. This means you now have an extra year to take advantage of portability.
Why is This Beneficial?
- More Time to Move: The extension to three years gives you additional time to find a new home that suits your needs and preferences.
- Less Pressure: You can take more time to sell your old home and plan your move without rushing, ensuring you don’t lose the tax savings.
- Financial Savings: By extending the period to three years, more homeowners can benefit from transferring their tax savings, potentially reducing the property tax burden on their new home.
Example
Suppose you sold your home in 2021. Under the old rules, you would have until 2023 to buy a new home and transfer your tax savings. With the new amendment, you now have until 2024 to complete this process, providing you with an extra year to benefit from portability.
Comments
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This program seems like a great way to help homeowners save money on property taxes and make the moving process easier. The extension to three years for transferring tax savings is a welcome change that can provide more financial relief for homeowners.
This program sounds like a great way to help homeowners save money on property taxes, especially with the added benefit of portability. It’s good to see that Amendment 5 extended the timeframe for transferring tax savings, giving homeowners more flexibility.
This program seems like a great way to help homeowners save money on property taxes and make them more predictable. The extension to three years for transferring tax savings with Amendment 5 is a helpful change for homeowners.
This article provides a clear explanation of the benefits of the “Save Our Homes” program in Florida and how homeowners can take advantage of transferring their tax savings to a new home. The extension to three years for portability under Amendment 5 is a positive change for homeowners.
This article is very informative about the “Save Our Homes” program in Florida and how it benefits homeowners. The explanation of portability and the recent changes with Amendment 5 are particularly helpful.
This article provides a clear explanation of how the “Save Our Homes” program works and the benefits of portability. The example and explanation of Amendment 5 are helpful in understanding the potential savings for homeowners.