If you contemplate whether you should buy a Florida property, then the Florida homesteading law is the place to start.
It is common for states to increase taxes and for individuals to look for a way to minimize their financial liabilities. Since taxes tend to add up, especially in states like Florida, there is a good reason for leveraging homestead tax exemption.
Understanding the peculiarities of local homestead rules can help you reduce the tax pressure and find an affordable place to call home.
If you consider moving to Florida from any state that collects income taxes, it might help you save a reasonable amount of money. However, buying a local residential property might result in extensive spending. The structure of the state’s real estate taxes illustrates why homeownership is so expensive in Florida.
Under the Homestead Act, any eligible individual can use the property tax exemption to minimize his financial obligations. The process is relatively simple, and as a rule, you need to conduct a property evaluation. It will help to determine the actual property tax on your residential home. Then, you will find out whether you can qualify for a homestead exemption.
If you do, it will relieve you from the obligation to pay the total tax value of your home. No matter where you live in Florida, the exemption works the same way. But bear in mind that it can only work if you claim residence in this state and your local property is your principal residence.
How much do you save if you apply for it? Here is an example of an exemption explained, illustrating how it works.
Generally, the total exemption value does not exсeed $50,000. If you own an $80,000 home, you will be relieved of the obligation to pay any property taxes on the first portion of $25,000. The next portion of $25,000, however, will be taxed regularly. You will be again relieved of paying taxes on the following $25,000 except for the school district taxes. The remaining $5,000 will be fully taxed.
That is why it is a popular cost-saving approach among Florida residents. If you are looking for additional ways to minimize your homeownership costs, you can combine the homestead exemption with the appropriate home coverage.
Understanding the basic requirements can grant you access to the homestead exemption benefits. Here is an eligibility checklist that can come in handy if you plan to use the exemption.
Naturally, only suitable applicants meeting all the requirements can access the exemption offers perks.
The specific criteria that determine whether you can qualify for exemption include the following:
Before applying, you need to collect all the required documents like a copy of your local driver’s license, your Social Security number, your mailing address, a bank statement, and a declaration of domicile. Apart from these documents, you may be required to provide additional information like your vehicle registration, the names of your dependents, and employment information.
It is crucial to mention that the homestead exemption can be applied to any property, personal or otherwise. Whether you own a modular home, a mobile home, a condo, or a townhome, it will not influence your eligibility.
If you have never owned a property or applied for a homestead exemption in Florida before, you must be wondering how it can be accomplished.
Once you are eligible to apply, you need to fill out and submit an application form called DR-501. You can submit it online, in person, or by mail. The form should be submitted by March 1 of the current tax year. But bear in mind that it will only grant you access to the exemption benefits for the current year.
In case you decide to file the form personally or send it by mail, you will have to find the address of the local appraiser’s office. This directory may come in handy if you are looking for a website or an address of the county official.
On the bright side, you only need to submit the form once, and the homestead exemption will automatically renew annually.
Such policies as homestead exemption can save you a great deal of money but, at the same time, can seem complicated to arrange for yourself. That is why realtors often take care of them while processing the real estate paperwork.
If you decide to move to Florida and apply for the homestead exemption, keep in mind that you must ensure that you are eligible and have all the required documentation. If you have any concerns or doubts regarding your eligibility, contact local county officials for more information on the matter.
Victoria is a Content Writer at American REIA, covering the latest industry news and various insurance topics, including auto, home, health, and life insurance.