In Florida, the Save Our Homes Amendment to the Florida Constitution prevents the assessed value of homestead property from increasing more than 3% per year, or the percent change in the Consumer Price Index, whichever is lower. While the tax savings from the Save Our Homes Amendment has no doubt helped many homeowners to stay in their homes even when values were rising, it also tended to discourage homeowners from moving to a new residence, for fear of giving up all of their accumulated property tax savings. In 2008, Florida voters attempted to change that by amending the Florida Constitution to allow for “portability” of their accumulated homestead exemption tax savings. This article will explain the basics of how to “port” your Save Our Homes tax savings to your new residence, and will address some of the more complicated situations that can arise, particularly when more than one owner is involved.
The rules regarding portability are set forth in Florida Statute 193.155(8). Essentially, a homeowner may “port” their Save Our Homes tax benefits to their new home as long as they establish their new homestead within 2 years of abandoning their previous homestead. More specifically, in order to qualify for portability in a given tax year, the homeowner must have received a homestead exemption on their previous homestead in one of the last two tax years. If the new homestead is more valuable than the old homestead, the homeowner may port up to $500,000 of capped value to their new homestead. For example, suppose your old home was worth $350,000, but was assessed at only $250,000 due to the Save Our Homes Amendment (a $100,000 cap differential). If you were to move to a new home worth $500,000, that home would be assessed at no more than $400,000 in the first year, with subsequent increases limited to 3% per year, or the percent change in the CPI. If you move to a less valuable home, the amount of cap differential that you may port will be limited to your old home’s assessed value divided by its just value. For example, if your old home was worth $500,000, but was assessed at $400,000, and you move to a less valuable home, the new home will be assessed at 80% of its just value the first year, as long as the cap differential does not exceed $500,000.
In order to port Save Our Homes benefits, when filing an application for a new homestead exemption, you must also file Form DR-501T, for Transfer of Homestead Assessment Difference by March 1st of the year you intend to establish a new homestead.
Portability When Combining Households
If two people who each have their own homestead decide to acquire a new homestead together, the Property Appraiser will use whichever prior homestead would result in the highest cap differential, and thus the highest tax savings. However, once again, the cap differential may not exceed $500,000.
Portability When Abandoning Joint Property
When joint owners abandon homestead property and acquire new, separate homestead properties, the cap differential that they are allowed to port is calculated as described above. However, the cap differential is then divided by either the number of owners of the prior homestead or, in the case of property owned as tenants in common, by each owner’s proportionate interest in the prior homestead. For example, if two joint owners would be allowed to port a $100,000 cap differential to the same new residence, if they move to separate new residences, they would each be permitted to port $50,000.
Challenging Portability Decisions
A taxpayer may not challenge the assessment of their prior homestead property in a prior year, as that would be contrary to the requirement in section 194.171, Fla. Stat. that all tax assessment challenges be brought within 60 days of the certification of the tax roll or the decision of the VAB. However, pursuant to Florida Statute 194.011(6), if a taxpayer disagrees with the Property Appraiser’s determination of their entitlement to portability or the amount they are allowed to port, they can file a Form DR-486PORT petition to the Value Adjustment Board where their new home is located. The VAB where the new residence is located will then submit a notice to the VAB of the county in which the taxpayer previously resided and that VAB will hear the petition and render a decision. The decision of the VAB in the previous county will be submitted to the VAB in the new county, which will consider that decision in rendering its own final decision (yes, I know – I never said this was a simple process). If a taxpayer disagrees with the decision of the VAB, they may appeal the decision to the circuit court of the county in which their new homested is located, and that proceeding shall be de novo.