Unlocking the Benefits of Florida’s Portability Tax for Homeowners
Are rising property values in Florida making you feel stuck? With home prices on the rise, selling your current property and upgrading to a new one may seem daunting, especially when you consider the potential increase in property taxes. But what if there was a way to reduce those taxes on your new home? Many Florida homeowners don’t realize they can save thousands with the portability tax.
What is the Portability Tax?
In Florida, property taxes are based on your home’s assessed value, which rises annually with the market. However, thanks to the Save Our Homes (SOH) benefit, the assessed value of your property can only increase by a maximum of 3% per year, even if its market value grows much faster. Over time, this creates a significant gap between your home’s assessed value (what you pay taxes on) and its market value (what it’s actually worth). The portability tax allows homeowners to transfer up to $500,000 of their SOH savings from one home to another within Florida. This means if you’ve owned your home for several years and built up savings under the SOH benefit, you can transfer that savings to your new home, effectively keeping your tax rate lower.
How Does Portability Work?
Here’s an example to break it down: Let’s say you bought your home 15 years ago for $200,000. Its market value has now risen to $500,000, but due to the SOH cap, the assessed value (on which your taxes are based) is only $300,000. The $200,000 difference represents your SOH savings. If you sell your home and buy a new one for $600,000, you can apply that $200,000 difference to reduce the assessed value of the new property. Instead of being taxed on the full $600,000, your taxes would be based on an assessed value of $400,000 ($600,000 minus the $200,000 portability savings). This can result in substantial property tax savings on your new home.
Why Portability Matters
Portability is a valuable tool for homeowners who want to upgrade or downsize without facing a significant tax hike.
Here’s why it matters:
∙Keeps Taxes Manageable: Moving to a larger or more expensive home doesn’t have to mean paying higher property taxes. Portability allows you to carry over the savings you’ve built up over time.
∙Flexibility in Housing Choices: Whether you’re looking for a bigger home for a growing family or a smaller one for retirement, portability helps you move without worrying about a major tax increase.
∙Encourages Mobility: Many long-time homeowners hesitate to move because they fear higher taxes on a new property. With portability, you can make a move that fits your lifestyle without a heavy tax burden.
How to Take Advantage of the Portability Tax
To use the portability tax benefit, you must apply with your local property appraiser when you file for a homestead exemption on your new home. You have up to three years to transfer your SOH savings, but applying sooner ensures maximum savings. Navigating the portability process can be complex, but the savings are worth it.
Contact a real estate agent at Pan Florida Realty for expert guidance on how to take advantage of this benefit and make your move as seamless as possible.
We're here to help you every step of the way, so you can enjoy your new home without the tax worries.
