Buying a home can be an exhilarating, terrifying and ultimately, satisfying experience, especially for the first-time homeowner. How prepared you are at the start of the process will determine how smooth a ride you’ve had by the end. Florida’s real estate laws can be murky for the uninitiated, so it is a good idea to familiarize yourself with some of the basics before you start hunting for a mortgage broker.
Florida is one of the few states to provide homestead exemptions to home buyers and the state’s exemptions can be substantial. There are two types of homestead exemptions: the property tax exemption and the asset protection exemption.
Real Property Tax Exemption
The real property tax exemption provides property owners a $50,000 reduction on the property’s assessed value. Beginning in January 1, 2019 the homestead exemption for homes worth $100,000 or more has been increased to $75,000. This means a home purchased for $350,000.00 would be taxed as if the purchase price were $275,000 which can translate to significant tax savings for the homeowner.
There are a few requirements the buyer must meet before receiving the exemption:
- The exemption is only available to you if you are the property’s permanent resident, i.e., the home is your primary residence.
- You must be residing in the home as of December 31 the year prior to claiming the exemption.
- You must apply for the exemption on or before March 1 at the office of the property appraiser.
Asset Protection Tax Exemption
The second type of exemption is aimed at protecting your home and surrounding property against creditors’ claims. The value of the property has no bearing on the exemption, so if you own a two-bedroom bungalow or a 50-acre farm, you are entitled to the same protection. Again, there are requirements the property owner must meet.
- The property must be your primary residence.
- A court will determine whether your property is within or outside a municipality. If it is outside the municipality’s borders, the exemption will protect up to 160 contiguous acres. If the property sits inside a municipality, the exemption will protect up to ½ acre.
Also note: If you are permanently disabled or are widowed, Florida real estate tax laws may entitle you to other deductions, as well.
Consult with a real estate attorney at the start of your journey to help you navigate the path to your first home.