Key takeaways
- Own the home and live in it as your permanent residence on January 1.
- File Form DR-501 with the county property appraiser by March 1.
- Once approved, the Save Our Homes cap limits how fast your assessment can grow.
For most retirees who buy a home in Florida, the homestead exemption is the single most valuable tax benefit the state offers. It reduces the taxable value of your primary residence and, just as important, unlocks a cap on how fast that value can rise. Here is how it works, based on the Florida Department of Revenue’s guides and the Florida Statutes.
What the exemption is worth
When someone owns property and makes it his or her permanent residence, the Department of Revenue explains, the property may receive a homestead exemption of up to $50,000. It comes in two parts, set out in section 196.031 of the Florida Statutes:
- The first $25,000 applies to all property taxes, including school district taxes.
- An additional exemption of up to $25,000 applies to assessed value over $50,000 and only to non-school taxes. That second $25,000 is adjusted each January 1 for inflation when the Consumer Price Index rises.
The department’s own examples make the arithmetic clear. On an assessed value of $45,000, the first $25,000 is exempt from all property tax and $20,000 is taxable. On $65,000, the first $25,000 is exempt, the next $25,000 is taxable and the remaining $15,000 is exempt from non-school taxes. On $100,000 or more, the first $25,000 is exempt, the next $25,000 taxable, the third $25,000 exempt from non-school taxes and the rest taxable.
Who qualifies
If you buy a property and make it your permanent residence by January 1, and file the application with the county property appraiser, you may receive the exemption for that tax year. You lose eligibility if the home is rented out, if it is no longer your permanent home or if you are no longer a permanent Florida resident. Only the property appraiser can decide whether a property qualifies.
How to apply
File Form DR-501, the Original Application for Homestead and Related Tax Exemptions, with your county property appraiser by March 1 of the tax year. Many appraisers accept applications online. First-time filers should be ready to answer whose names were on the title on January 1, give Social Security numbers for themselves and any co-applicant or spouse, confirm they were living in the home on January 1, and say whether they claim residency in another county or state.
Proof of residency
The Department of Revenue lists items an appraiser may ask for, including:
- Proof of previous residency outside Florida and the date it ended
- A Florida driver license or ID card number
- Evidence of giving up a driver license from another state
- A Florida vehicle license plate number
- A Florida voter registration number, for U.S. citizens
- A declaration of domicile and residency date
- The address on your last IRS return
- Bank statements and proof of utility payments at the homestead address
Most of these come from the steps in Moving to Florida: A Residency Checklist for Retirees, which is why it pays to do them early in your first year.
Save Our Homes: the cap that grows in value
After the first year a home receives a homestead exemption and is assessed at market value, the assessment for each following year cannot increase more than 3 percent or the percent change in the Consumer Price Index, whichever is less. The department calls the gap between assessed value and market value the Save Our Homes benefit. Even if your home’s market value falls, the assessed value may still rise by the limited amount, but it can never exceed market value.
Tell your property appraiser if your homestead status changes. A loss of homestead triggers reassessment, and the department warns that failing to report a change can lead to penalties.
When the benefit is lost, and when it moves with you
A change of ownership, defined as any sale, foreclosure or transfer of legal or beneficial title, ends the benefit, and the home is reassessed at market value the next January 1. Some transfers do not trigger reassessment, including transfers between spouses, certain transfers at death and transfers to correct an error.
If you move from one Florida homestead to another, portability lets most owners transfer their Save Our Homes benefit to the new home. Under section 193.155, when the new home is worth as much as or more than the old one, its assessed value is its market value minus the lesser of $500,000 or the old home’s benefit.
If your application is denied
You may file a petition with your county’s value adjustment board. The homestead exemption works alongside other tax rules covered in Florida Taxes for Retirees: No State Income Tax, What You Still Pay and How Property Tax Works.