Have you ever thought about buying a property in Florida? If you have, you may have heard of something called the homestead exemption.
The Florida homestead exemption is a powerful legal regime to reduce the tax burden on homeowners.
In this guide, you will learn how the Florida homestead exemption works and who is eligible for it:
What is the Florida Homestead Exemption?
The Florida homestead exemption protects the value of your homestead from property taxes and can reduce the taxable value of your home by $50,000. The exemption is offered, based on your home’s assessed value and comes with certain limits. For the first $50,000 in assessed value, up to $25,000 is exempted. You will pay full tax on the value between $25,000 and $50,000. For assessed value between $50,000 and $75,000, an additional $25,000 is exempted from tax.
For clarity’s sake, let us look at the break down:
- If your home is worth $45,000, the first $25,000 will be exempted from tax. The remaining $20,000 will be taxed normally.
- If your home is valued at $70,000, the first $25,000 in assessed value will be exempted, the second $25,000 would be taxed, and the remaining $20,000 would be taxed as normal except for school district taxes.
- If your home is worth $95,000, the first $25,000 will be exempted from tax, the second $25,000 will be fully taxed, while the third $25,000 will be exempted from tax except for school district tax and you will have to pay tax on the remaining $20,000.
Who is Eligible for Florida Homestead Exemption?
Here is the criteria to be eligible for Florida’s Homestead exemption:
- You must be a permanent resident of the property OR the property must be a permanent residence of someone you can depend on for taxes.
- You must have lived at the property on January 1 of the tax year. So if you hope to be eligible for homestead exemption in 2020, you must have lived in the property on Jan 1, 2020.
- You cannot rent out the property for more than 30 days a year. If you rent out the homesteads for 30 days for two consecutive years or for over six months, you will become ineligible for the homestead exemption.
Aside from the above-mentioned individuals, certain groups are also eligible for homestead exemption:
Homestead Exemption for 65 Year Olds or Older
These persons are eligible for additional homestead exemptions up to $50,000:
- The county adopts a decree to offer additional homestead exemption on its own taxes.
- The taxpayer is 65 years or older on January 1 of the year when he or she is claiming exemption.
- The annual household income of the taxpayer for the previous year did not exceed $20,000 (this amount is adjusted each year based on the average cost of living).
- The taxpayer submits a sworn household income statement every year to the property evaluator no later than March 1.
Homestead Exemption for Disabled Veterans
Disabled veterans may get discounts that are deemed equal to the percentage of a veteran’s permanent service connected disability by the Department of Veterans Affairs.
- Veterans who have reached 65 years of age if they have been honorably discharged from the military.
- If they are partially disabled with a permanent combat-related disability sustained in the line of duty.
- They were a resident of Florida when they entered the military.
Homestead Exemption for Spouses of Qualifying Veterans
Tax exemption may also be awarded to:
- Surviving spouses of eligible veterans who died during the line of duty may be granted exemption less the portion used for commercial purposes.
- Spouses entitled to this exemption should be a permanent resident of Florida since January 1 of the year when the claim was filed.
Homestead Exemption for Totally and Permanently Disabled Persons
Tax exemption may be granted to:
- Homestead owned and used by a quadriplegic, hemiplegic, or totally or permanently disabled person may be exempted from taxes, less the portion used for commercial purposes.
- Persons entitled to this exemption should be a permanent resident of Florida since January 1 of the year when the claim was filed.
- The annual gross household income of the taxpayer for the previous year does not exceed the amount stated in section 196.101(4), F.S., (this amount is adjusted each year based on the average cost of living).
How to Apply for the Florida Homestead Exemption
In order to get the exemption, you should file the paperwork by March 1 of the year in question.
Complete the DR-501 form and provide proof of Florida residency by the following document:
- A Florida state ID or driver’s license
- A Florida vehicle registration number
- A Florida voter’s ID
- Proof of residency ended in a state other than Florida
- Declaration of domicile and residency in Florida
- Name of current employer
- School address of any children
- A bank statement and mailing address for checking account
- Proof of payment of utilities from a Florida address
The great thing about Florida’s homestead exemption is that it will be renewed each year by the government. After January 1 of each year, the state of Florida will send you a homestead exemption receipt to confirm renewal. You must contact the state if you no longer qualify for exemption. This can happen if you are:
- The house is no longer your permanent residence.
- You have rented the homestead for over 30 days.
- You no longer own the homestead.
If you do not inform the government of the change in status, you will be subject to tax liens.
Final Words
Florida homestead exemption just cuts down the amount of tax you are responsible for paying. It does not reduce the value of your property. When applying for exemption, make sure you know all the rules and regulations related to homestead exemptions. If you still have concerns, e-mail Misty Morrison today.
