Unlocking Tax Savings: How Portability Can Help You Save Big on Your Next Florida Home
Tax portability is a unique feature of Florida's property tax system that can help homeowners save money when selling and buying a new home. In essence, it allows homeowners to transfer a portion of the "Save Our Homes" benefit they have accumulated on their current property to their new property, effectively reducing their property taxes on the new home.
The "Save Our Homes" benefit is a popular property tax exemption in Florida that limits the increase in assessed value of a primary residence to no more than 3% per year. This means that if the value of a home increases rapidly due to market forces, the property taxes on that home will not increase by more than 3% annually, providing significant savings to homeowners over time.
However, when a homeowner sells their current property and buys a new one, they lose the accumulated "Save Our Homes" benefit they have accrued on their old property. This can result in a significant increase in property taxes on the new home, which can be a deterrent for many homeowners looking to move.
This is where tax portability comes in. Florida's tax portability allows homeowners to transfer up to $500,000 of their "Save Our Homes" benefit to their new property, depending on the difference in assessed value between the old and new homes. This can result in a significant reduction in property taxes on the new home, making it easier and more affordable for homeowners to move.
For example, suppose a homeowner has been living in their current home for many years and has accumulated a "Save Our Homes" benefit of $200,000. They decide to sell their home and purchase a new one for $600,000. Under Florida's tax portability rules, the homeowner can transfer $200,000 of their "Save Our Homes" benefit to the new property, effectively reducing the assessed value of the new home to $400,000 for property tax purposes. This can result in a significant reduction in property taxes on the new home, making it more affordable and attractive to the homeowner.
Overall, tax portability is an excellent feature of Florida's property tax system that can help homeowners save money when selling and buying a new home. It provides a significant incentive for homeowners to move without fear of losing the benefits they have accumulated on their old property, making it easier for them to find their dream home and enjoy the Florida lifestyle.