Florida is one of only a handful of states that has no state income tax! This is another reason many wealthy and retired people are so attracted to Florida. (Besides the weather.)
On January 29, 2008 voters passed Proposition 1 property tax measure, once again making Florida one of the lower taxed states in the nation. Here is a condensed explanation of current property tax laws:
If the home is your primary residence, you are entitled to a $25,000 Homestead deduction, $50,000 per married couple.
Example: if you purchase a home that is assessed at $300,000 you will be taxed on $250,000 if married.
About a month after buying a home, the assessors office will send you a questionnaire and a Homestead Exemption form. Be sure to complete both forms and return to the assessors office. The homestead exemption will be applied beginning January 1st of the year following your purchase. The Lee County Assessors office is located in Fort Myers and the phone number is (239) 533-6100. If you have any questions or concerns about homestead exemption, just give us a call.
If your primary residence (Homesteaded) appreciates during the year, property taxes can only increase by a maximum of 3% (or cost of living - whichever is less). Non-Homesteaded or investment property taxes cannot increase by more than 10%, regardless of how much the real estate market may rise during a strong market.
If real estate values decrease, your assessed value will decrease accordingly, whether you are Homesteaded or not. However, if the real estate market turns upward by 20% or 30% in a year, your tax assessment can only increase by 3% if Homesteaded, and 10% if non-Homesteaded. This property tax limitation greatly benefits second homeowners, foreigners, and investors.
When you sell your primary residence, you may transfer the difference from the original assessed value and the sale price (up to $500,000). This is called Portability. You then deduct the difference from the next property’s assessed tax value if the new property is of the same or higher value.
Example: you buy a Homesteaded property with an assessed value of $250,000. You later sell that home for $400,000. You have $150,000 in “Portability” that can be deducted from the assessed value of your next residence. This is in addition to the $50,000 Homestead exemption. Assuming you purchased your next home for $500,000, you will still pay taxes on only 300,000!
If you buy a home that is less expensive than the one you sold, and the old property increased in value, you may still apply a percentage formula to save on property taxes.
We have done our best to provide a simplified explanation of the property tax structure, SOH, Portability, and Homesteading, but it can still be confusing. Feel free to call us with any questions or clarification, or to receive a more in-depth report on this subject. You can also visit the Lee County website at http://www.leepa.org/
Have more questions? Contact Tom and Sue Demogenes. We're here to help!