Title: Limitations On Homestead Property Tax Assessments; Increased Portability Period To Transfer Accrued Benefit
Placed By: Florida Legislature, HJR 369
Ballot Summary: “Proposing an amendment to the State Constitution, effective January 1, 2021, to increase, from 2 years to 3 years, the period of time during which accrued Save-Our-Homes benefits may be transferred from a prior homestead to a new homestead.”
A yes vote means: Supports extending the period of time during which accrued Save Our Homes benefits may be transferred from two years to three years.
A no vote means: Accrued Save Our Homes benefits may be transferred for two years, consistent with current law.
SupportersThe measure was passed unanimously by both chambers of the Florida Legislature.
Supporters argue that individuals selling homes covered by a homestead exemption do not actually have two years in which to transfer their Save Our Homes benefits. To be able to transfer the benefits, a homeowner must have received a homestead exemption for the new home within two years of January 1 of the year in which the old homestead was abandoned (not two years after the sale). A homeowner, for example, who sells their home in December 2020 would have until January 1, 2022 to transfer their Save our Home benefits (a period of 12 months and a few days, not two years). Approval of Amendment 5 would reflect what the voters originally intended when the portability of Save Our Homes was passed.
OpponentsSome have argued portability of the Save Our Homes benefit shifts the tax burden from homestead property owners to non-homestead property owners or decrease tax revenues for schools and local governments.
Until 1992, the taxable value of a primary residence was the market value of the property minus the homestead exemption. When a home’s market value increased, so too did its taxable value (and the amount of taxes paid).
In times of rapidly escalating market values, property taxes also escalated rapidly. In many cases, homeowners were taxed out of their homes because they could not pay the rapidly increasing property taxes.
This changed in 1992 when voters approved a citizen initiative known as the “Save Our Homes Amendment,” which limited increases to the assessed (taxable) of homestead property to a maximum of 3 percent (or the increase in the CPI, whichever is less) annually, no matter how much the market value of the property increased. This helped to prevent homeowners from being taxed out of their homes. The “benefit” of Save Our Homes is the difference between the market value and the assessed value. This benefit stays on the property as long as there are no changes in ownership or improvements to the property.
While the exemption is generally nontransferable, a homeowner may be able to transfer or “port” all or part of the assessment difference to a new Florida homestead. In 2008, Florida voters approved another amendment that allows homeowners that are relocating within Florida to transfer their accumulated Save Our Homes benefit to a new home if they had the homestead exemption on their prior house in either of the two preceding years. This allows the property owner to retain the benefits of a reduced assessed value when changing permanent residences. The maximum amount that can be ported is $500,000. If an individual moves from their current homestead to a new homestead and the just value of the new homestead is higher than the previous homestead, the assessed value of the new homestead will be the just value of the new homestead minus an amount equal to the lesser of (i) $500,000 or (ii) the difference between the just value and the assessed value of the prior homestead.
New construction and additions are initially assessed at full value, then the cap applies to that baseline in subsequent years. Changes in ownership also cause the property to be reassessed at full value. The Save Our Homes assessment limitation helps millions of Florida homeowners save money on their property taxes every year.
Currently, homestead property owners can transfer their Save Our Homes benefit to a new homestead if the new homestead exemption is established by January 1 of the second year following abandonment of their old homestead. If passed, Amendment 5 would extend the period for establishing a new homestead exemption by an additional year.
Florida TaxWatch has pointed out over the years that while Save Our Homes has saved homesteaders billions of dollars since implemented, it has also shifted much of that tax burden to other properties, including commercial, second, and vacation homes, non-homestead residential property owners, and rental property.
The state Revenue Estimating Conference has estimated the proposed change would trim local property taxes by $1.8 million next fiscal year, growing to $10.2 million in five years. A little more than one-third of these revenue losses ($3.8 million) would be attributable to school districts and other local governments (cities, counties, and special districts) would lose $6.4 million.
On average Floridians can realize a tax savings of $1,730 per every $100,000 (based on the statewide average current millage rate of 17.3) on their homestead with the Save Our Homes initiative. Over time, this can really add up. Amendment 5 will allow homeowners to take their Save Our Homes benefit with them for up to three years, which can equate to a few thousand dollars in property tax savings.
Florida TaxWatch has historically recommended against expanding Save Our Homes because of the resulting increase in the tax shift it causes; however, $10 million total fiscal estimate of the change is a miniscule portion of the state’s nearly $36 billion property tax system, while the savings enjoyed by a single homeowner that moves can be substantial. The increased fairness provided to homeowners far exceeds any inequity caused to other property taxpayers.
For these reasons, Florida Taxwatch recommends a “yes” vote on amendment 5.