Florida’s Homestead Portability Law’s

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Florida’s Homestead Portability Laws, also known as the “Save Our Homes Portability” provision, were implemented in 2008 as an amendment to the Florida Constitution. These laws allow homeowners to transfer their “Save Our Homes” benefit, which caps the annual increase in property taxes on a primary residence, to a new primary residence within the same county or to a new county within the state.

To qualify for the Homestead Portability benefit, homeowners must have established a Homestead Exemption on their previous primary residence and must apply for the benefit within three years of January 1st of the year you abandoned the old homestead (not three years after the sale).

Example: You leave your property in November of 2020, the Homestead stays on the property through December 2020. You have until January, 1st 2023, to establish a new Homestead and “port” the benefit over to the new home. In the meantime you can buy another property, rent or even move out of State, and still return in time to re-apply the assessment difference.

The benefit is calculated based on the difference between the assessed value of the previous primary residence and the new primary residence, and it can be transferred to the new primary residence for up to three years.

Note: The “Homestead” can be the same property. We previously helped a client who had rented out their property for one year, which caused the loss of the Homestead Exemption, but was able to re-apply the following year and re-gain the assessment difference. However, doing this will likely result in a higher base market value, so this is not recommended unless truly necessary.

This law is intended to help Florida residents who are looking to downsize or move to a new area without having to sacrifice their “Save Our Homes” benefit, which can provide significant savings on property taxes.

Overall, Florida’s Homestead Portability Laws provide an opportunity for homeowners to take advantage of the “Save Our Homes” benefit when moving to a new primary residence within the state, helping to ease the financial burden of property taxes. However, it’s always important to check with the local property appraiser to understand the specific rules and regulations for your county.

You can read more about the process and see more frequently asked questions on the Miami-Dade County Property Appraiser website.

Tax Appeals and COVID-19 Shutdowns

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Dear Clients and Friends

The coronavirus pandemic has caused unprecedented and unexpected disruptions to almost every facet of our lives and this will surely flow through to the relationships between tenants and landlords and ultimately the valuation of real estate.

We hope that all our valued owners and managers will do everything they can to keep tenants in place and hopefully everyone gets back to work safely and soon.

Your real estate taxes for 2020 will likely be unaffected by the disruptions and the governments’ mandated stay-at-home orders because the real estate values are based on January 1st of each year, and by all accounts real estate, especially industrial properties in South Florida, were at phenomenal levels at the end of the 2019.

However, the 2021 appraised values for tax assessment purposes will need to take into account the lost cash flows, and loss of subsequent value that may occur as a result of tenants being shutdown or landlords proactively cutting rents or providing other incentives.

We expect to have a very active tax appeal season for the next two years because of this, and we urge all returning and new clients to attempt to keep notes on how the shutdowns have affected their properties and any deals they are making with tenants.  Most appeals will rely on factual numbers to analyze property but personal stories are helpful as well.

We hope everyone is able to stay safe and healthy.

Please email us if you have any questions or concerns.

Your Fair Share!

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If you live in Florida and own property, you will receive a TRIM (Truth in Millage) notice in the next 4 to 6 weeks. This notice will give you an estimate of the real estate taxes that the property must pay, based upon the assessment and proposed millage rate.

The assessment (value) is established each year by the County Property Appraiser using mass appraisal techniques. The millage rate is based on funds the city and county government need to operate, divided by the total values of all real property in the County. The real estate taxes for a property is then calculated by multiplying the assessment – say $100,000 times the millage rate of say 19 mills, which is really 1.9% or .019. This equals a tax of $1,900. I sometimes think that the term millage rate is used to confuse the taxpayer. It would be much clearer if it was expressed as a percentage of value.  As in you’ll be paying about 2% of your properties value in taxes each and every year.

As a taxpayer, you are only obligated to pay your fair share. And if you think you are unfairly assessed there is something you can do about it.

File An Appeal With Us

Unfortunately the only part of the real estate tax equation which can be appealed is the assessment.  However you are always welcome to attend the budget hearings to find out more about that process.

After you receive the TRIM notice, there is usually a period of 25 days to file an appeal petition if you wish to protest the assessment. Then, sometime in the next 12 months there will be a hearing before a Special Magistrate to debate the assessment. As a property owner, you can file the appeal and present your arguments before the Special Magistrate. However, many property owners have found that using a professional is much more effective.

With our 30 plus years of combined knowledge of South Florida real estate valuations as estate brokers, professional appraiser, teacher and economic analysts, we are well equipped to represent property owners in the successful appeal of real estate tax assessments.

WE CAN MAKE SURE THAT YOU ARE ONLY PAYING YOUR FAIR SHARE OF REAL ESTATE TAXES.

File An Appeal With Us

How much of my real estate tax bill should I pay?

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Q: I just received my tax bill and the county now offers the option to pay only 75% of the tax bill.  How much of my real estate tax bill should I pay?

A:  The simple answer is 100%, and not the 75% option.

Here’s a few reasons why this is bad for our clients and tax payers in general.

  • After the appeal process you will still need to pay the difference between the original bill and the revised bill, PLUS INTEREST at 1% per MONTH.
  • If the time it takes for them to schedule the hearing exceeds (in months) the percentage of savings achieved, you could be liable for a bill that is larger than originally listed even after winning the appeal.  This is because on average the appeals don’t take place until almost a year after the petitioned get filed and sometimes closer to a year and half.
  • We would need to achieve a reduction of more than 25% to negate any interest penalties that have accrued.  While this has happened in the past in some cases, it is not the norm and shouldn’t be expected.
  • You can actually make money!  To offset the INTEREST PENALTY the law includes a provision that the petitioner will EARN the 1% per month INTEREST if the County must issue you a refund because of a reduction.
  • Banks do not like this.  A few clients have told of us issues with their banks thinking they were in default when the county showed an outstanding balance on the account before the appeal hearing had been scheduled.
  • Lastly, it makes it very confusing, for all involved, for us to have to send you a bill for a 10% reduction, when you still owe the county 15%, plus interest at 1% per month for 8 months.  We’ll look bad, you’ll feel cheated when in actuality we did save you quite a few dollars.

If you’d like to see the exact amount due at any time you may visit the Miami-Dade Tax Collectors Search Page

Search Taxes

What Is Your Fee Structure?

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What Is Your Fee Structure?

We bill based on the amount of savings you receive on your tax bill before any interest or penalties are accrued.

Because we have no knowledge of when you pay the Tax Collector or when the refunds are processed.  We assume that you have paid your taxes in November (as we recommend to all our clients) and have received the 4% discount for early payment and take that into account in our invoices.

Below is an example of what we would charge on property that was reduced from $1,500,000 (School Board)/$1,000,000 (Capped) down to $900,000.

Folio Number: 01-1234-56-7980
Tax Authority Millage Preliminary Revised Reduction Savings
School Board 0.0080 $1,500,000 $900,000 $600,000 $4,797
County/City/Region 0.0150 $1,000,000 $900,000 $100,000 $1,500
0.0230 $6,297
Less: 4% Discount
Original Tax Bill $26,990 $25,910
Revised Tax Bill $20,693 $19,865
Savings $6,297 $6,045
Rate 35%
DCRE Invoice $2,116

 

Should I Pay My Real Estate Taxes?

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The short answer is YES.

If you have a residential property that you feel is over assessed we recommend to you them as soon as you can.

However you may still hire us after the TRIM notices are sent out and we will handle a formal VAB petition for you.

In the meantime please pay your Tax Bill when it arrives in November. You may notice that because you have filed a VAB petition you have the option of paying only 75% of the total bill as a “good-faith” payment. DO NOT DO THIS! You should pay 100% of your tax bill as shown on the Property Appraisers & Tax Collectors Website.

This is because if we are unable to get you more than a 25% tax reduction, you will be responsible for the difference PLUS interest which starts accruing in May at 1% per month. Seeing as most appeals DO NOT result in savings of more than 25% and occur nearly 6-12 months after May we STRONGLY advise against paying only 75% of the bill.

Furthermore, if you pay the 100% amount, and the VAB does reduce the value, then you will be entitled to not only the base refund (original minus the revised tax amount) but you will also receive interest.

For those interested they can read the statute online here.

What Is The 10% Non-Homestead Cap System?

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What Is The 10% Non-Homestead Cap System?

All properties that are not already protecting from increases of more than 3% per year under a Homestead Exemption are now benefiting from a 10% increase cap.

The is a new state laws that set a 10% per year assessment increase cap in place for the assessed values for the City, County, and Region portions of your tax bills.  However this cap does not apply to the School Board portion of the bill.

This means that that if in the previous year the value of your property was $100,000, then this year the highest it could go to would be $103,000 for about 2/3 of the bill.  The other 1/3 of the bill (The School Board portion) would be dictated by the market value, and could for example be raised to any amount that is justified.

Furthermore the capping system only affects the value of the property and not the total taxes owed, similar to the way the “Save Our Homes” amendment capped the increase of Homesteaded properties at 3% per year (or the CPI, whichever is less.)

Thus you may notice that despite the value of your property decreasing or staying the same the taxes you are required to pay has gone up or stayed the same.  See our post If Real Estate Values Have Gone Down, Why Did My Taxes Go Up? for more in depth explanation.

 

If Real Estate Values Have Gone Down, Why Did My Taxes Go Up?

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In Florida this is the time of year when property owners are notified of the amount of the real estate taxes to expect on the tax bill which will be sent the first of November.  This notice know as a TRIM or “Truth in Millage” notice.   In some cases, for the year of 2010 it is showing an increase in the real estate taxes, even though values have declined.

This increase is because of one of two possibilities.  Although the Market Value may have declined the “Assessed Value” (the amount used to calculate your taxes) increased because of the provisions Florida’s “Save or Homes” or Homestead Exemption legislation.  Homestead Exemption provides that the assessment for residential properties, with Homestead Exemption, cannot increase by more than 3% or the Cost of Living, whichever is less.  For the year of 2010 the Cost of Living increase is calculated at 2.7%.  Therefore, for residential “Homestead Exempt” properties the assessment increased by 2.7%, This can happen up until the Assessed Values and Market Values meet.  But under no circumstances can your Assessed Value exceed your Market Value.

The other possibility is that the Millage Rate increased more than the property’s value decreased.  Real estate taxes are calculated by multiplying the “Assessed Value” by the “Millage Rate”. The “Millage Rate” is based on the amount of money local government needs from real estate assessments divided by the total “Assessed Values.”  For example, if government needs $1,000,000 to operate and the total “Assessed Value” is $50,000,000 the millage rate is 20 mills or more simply 2.0% of “Assessed Value”.  If government needs $1,000,000 and the total “Assessed Value” declines to $45,000,000 then the Millage rate will increase to 22 mills or 2.2%.  Therefore, when “Assessed Values” decline and government needs remain the same the Millage rate will increase.  For properties in the City of Miami, the Millage rate from 2009 to 2010 increased by 14.27%.

For example, if your property is in the City of Miami, unless the “Assessed Value” decreased from 2009 to 2010 by more than 14.27% your real estate taxes will be the same or higher.  This increase in taxes is a result of the millage rate increase because of the decline in “Total Assessed Values” without a equal decline in the Governments budget for the year.

Although the “Millage Rate” for all classes and types of properties in a government area are the same, the limitation on the increase in assessments under “Homestead Exemption” does not apply to non-homestead properties, for those properties there is now a 10% increase cap for the portions of your tax bill that are paid to the City/County/Region, but the cap does not apply to the School Board portion of which for the Assessed Value always equals Market Value, and is taxed on that amount.

In reviewing the assessment for commercial properties of our tax appeal clients, we have found moderate increases in the assessments but with the increase in the millage rates the real estate taxes have increased.  For example, if your property is in the County and the “Assessed Value” remained the same, the increase in the “Millage Rate” of 8.6% means your real estate taxes are 8.6% greater.

What can you do to make sure you are only paying your fair share of real estate taxes?  If you believe your assessment is too high you can file an appeal petition or have us appeal on your behalf.  If you believe the millage rate is too high you should attend the City and County Budget Hearing Meeting to express your feelings and demand a reduction in government spending.  One solution I have suggested is that every government expenditure, every payment and every expense should be easily available for public review online.  Our government needs to be held accountable for how they spend our tax dollars.

By Tom Dixon

How Do I Prevent Losing My Parents Homestead Exemption When They Pass?

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Question:
My parents owned their home for many years and had Homestead Exemption.  I’ve been living in my parent’s house and taking care of them in their last years.  But last year they passed and when I inherited the house, the Homestead Exemption was lost and now the real estate taxes have tripled.  What can I do?

Answer:
This is one question we get every year around this time and is one we unfortunately can’t be that helpful with other than informing the public ahead of time and referring our clients to a knowledgeable estate planner or lawyer.

Sadly if you find yourself in the above situation it may be too late.  But with the proper estate planning this situation can be avoided.  There is a little known provision in Florida Law that allows property to be transferred into a Trust and with the proper legal language allows the Homestead Exemption to be passed down to the children given that they have been living with their parents and have no other homestead.  For a more detailed explanation and to setup this up we recommend speaking with our friend and colleague Chris Vasallo at (305) 233-9066.

Christopher D. Vasallo, Esq.
J.D., LL.M. in Taxation

Vasallo-Sloane-Logo

Vasallo Sloane, P.L.
12394 S.W. 82 Avenue
Pinecrest, Florida 33156
Tel:  305.233.9066
Fax:  866.389.2760
Email:  [email protected]