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What is Florida Homestead Portability?

Dollars SecuredI had a client ask me about portability recently and I wasn’t quite sure how to answer her. So, I did some research and this is what I’ve found. Keep in mind, I’m just a Realtor, not an attorney or tax professional!

According to a Florida law firm based in Coral Gables, portability allows a homestead property owner to lower the tax assessment on their current home, thereby lowering their taxes on the property.

This is how it works: as of January 29, 2008, when Florida voters approved Amendment 1 to the Florida Constitution, it essentially allowed for an additional $25,000 homestead exemption as well as portability of a “SOH” benefit, among other things.

Love My HouseThe SOH benefit is short for “Save Our Homes Amendment” and it prevents the assessed value of your property (starting at the first year the property takes a homestead exemption and it’s just value is assessed) from increasing more than 3% per year (or exceeding the percent change in the Consumer Price Index, whichever is lower).

So, the accumulated difference between assessed value and market value is considered your SOH benefit or savings. This amount (up to $500K) can be transferred from an old or existing property to a new one. This MUST be elected by January 1st within the first two years of establishing a new homestead.

You apply for portability at the same time you apply for homestead exemption, although it’s a separate application. You must fill out the Form DR-501T (Transfer of Homestead Assessment Difference).

Click to read the Orange County Property Appraiser’s handy Portability FAQ sheet.

Click for instructions and to apply for portability in Orange County.

The Seminole County Property Appraiser website offers a clear example of portability savings, whether upsizing or downsizing:

If you are upsizing (buying home with higher just market value than previous home) please refer to the following example:

  • Previous Home Valued at $400,000 and Assessed at $200,000 (SOH Value)
  • $400,000 – $200,000 = $200,000 (Portable Amount)
  • New Home Valued at $500,000 – $200,000 (Portable Amount) = $300,000 (New Assessed Value for new Home)

If you are downsizing (buying home with lower just market value than previous home) please refer to the following example:

  • Previous Home Valued at $400,000 and Assessed at $200,000 (SOH Value)
  • SOH Value divided by value = % eligible; $200,000 /divided by $400,000 = 50% (% eligible to “port” to new property)
  • New Home Valued at $300,000 x 50% (port %) = $150,000 (New Assessed Value for new Homestead)

If you have any further questions, please visit the website links above or consult your attorney or accountant. If I may be of assistance in your next purchase or sale, please call me at 407-236-6559 for a pleasant, no obligation meeting.

Images courtesy of bluebay and winnond at FreeDigitalPhotos.net