Florida law provides generous homestead benefits to homeowners, including a $25,000.00 property tax exemption applied to the first $50,000.00 of a property’s assessed value.* However, understanding the nuances of the “Save Our Homes” cap for homestead and non-homestead properties will help homeowners avoid unexpected tax liabilities.

By John J. Campo, Carlee G. Mattison, and L. Benton Alexander, Jr.

Residential property owners in Florida should be aware of the significant tax benefits provided by the Florida Constitution and Florida Statutes. These benefits hinge on whether property is classified as homestead or non-homestead. Homestead property is an owner’s primary residence. Article X, Section 4 of the Florida Constitution defines homestead property as up to 160 acres of contiguous land and improvements thereon if located outside a municipality or one-half (1/2) acre of contiguous land if located within a municipality.

The 1992 “Save Our Homes” amendment to the Florida Constitution is codified in Section 193.155, Fla. Stat., for homestead property, and Section 193.1554, Fla. Stat., for non-homestead property. The amendment created the Save Our Homes (“SOH”) cap, which limits the annual increase in the assessed value of real property (which occurs on January 1 of each tax year).

The SOH cap is 3% for homestead property and 10% for non-homestead property, both of which offer property owners substantial insulation from tax increases as property taxes rise in tandem with assessed values. The 10% SOH cap is automatically applied, whereas the 3% SOH cap is not applied until the property is designated as homestead property. This occurs when a property owner files a homestead application with the applicable county property appraiser’s office no later than March 1 of the applicable tax year. Thereafter, the homestead exemption automatically renews annually unless there is a change in the property’s status or ownership (e.g., sale of the property, rental of a property for more than 30 days per calendar year for two consecutive years, or the owner claims the homestead exemption on another property).

Switching between the two SOH caps can lead to counterintuitive results. For example, if homestead property becomes non-homestead property, the property will lose the benefit of the 3% SOH cap and be reassessed at full market value the following January 1 before receiving the benefit of the 10% SOH cap. This unexpected pitfall was ratified in Orange County Prop. Appraiser v. Sommers, 84 So. 3d 1277 (Fla. 5th DCA 2012) when the Fifth District Court of Appeal held that “the legislature did not intend a single piece of property to be entitled to both the homestead exemption and tax cap and the ten percent non-homestead tax cap at the same time.” As such, non-homestead residential property is required to be assessed at just value on January 1 of the year following a change of ownership or control. This principle is codified in Section 193.1554(2), Fla. Stat.

Similarly, if a non-homestead property becomes homestead property, the property will lose the benefit of the 10% SOH cap and be reassessed at full market value the following January 1 before receiving the benefit of the 3% SOH cap in subsequent years. This could either allow a property owner to owe fewer taxes by maintaining the 10% SOH cap, even if they begin using non-homestead property as their primary residence, or result in an increase in taxes that may be significant enough to force families to sell and relocate.

Takeaways
If you are a prospective or current property owner, you should:

• Be aware of the tax implications and benefits of the SOH cap for homestead and non-homestead residential property;

• Understand that when purchasing property that currently receives the benefit of either the 3% or 10% SOH cap, the seller’s exemption benefits will terminate the following January 1 after closing and the property will be reassessed at full market value before receiving any benefits applied for or received by you;

•Be mindful that a change in the status of your property (i.e., from non-homestead to homestead, or vice versa), will cause your property to lose its current exemption benefits and be reassessed at full market value the following January 1 before receiving the benefit of another exemption;

•Know that you must file a homestead application with the applicable county property appraiser’s office no later than March 1 of the calendar year following your acquisition of the property.

Homeowners can realize significant benefits from the Save Our Homes amendment but when purchasing, selling, or changing the property’s status, owners must carefully consider the impact of reassessments and eligibility deadlines.

*Pursuant to the recent electoral approval of Amendment 5, effective January 1, 2025, the $25,000.00 property tax exemption amount will be adjusted on January 1 of each tax year for inflation.

The information provided in this article does not, and is not intended to, constitute legal advice; it is for general informational purposes only. No reader of this article should act or refrain from acting on the basis of this information without first seeking legal advice from counsel in the relevant jurisdiction to ensure the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.

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