How to Legally Pay Less Property Tax on Your Home in Florida

How to Legally Pay Less Property Tax on Your Home in Florida

Owning a home in Florida, for some, has turned from a dream into a nightmare. Homeowners, in addition to facing high mortgage rates, must also pay high insurance premiums and taxes.

When someone buys a house with a mortgage, lenders, who prefer to minimize investment risks, often require setting up an escrow account. This account pre-pays the primary obligations for the home: insurance and taxes. Missing any of these payments could lead to losing the property. With rising costs due to inflation, homeowners’ insurance increases, and rising property taxes, many homeowners are seeking ways to alleviate financial strain to keep homeownership from weighing too heavily on their finances. However, many don’t know that there is a legal way to reduce property taxes.

Benefits of the Homestead Exemption for Florida Homeowners

There is a legal way to pay less in property taxes: applying for a homestead exemption. In Florida, a law allows homeowners to reduce the taxable value of their primary residence. Essentially, the law exempts the first $50,000 of the home’s taxable value, in two increments of $25,000. For example, if your home’s market value is $500,000, you would pay taxes on $450,000.

What is the Save Our Home Act and How Does It Benefit You?

Another benefit of this exemption is the Save Our Home law, which prevents the taxable value of an exempt property from increasing by more than 3% per year. For example, if this year you paid $7,000 in taxes, next year your taxes could only increase to $7,210 (3%). Conversely, if this were a second home, without the exemption, the tax could rise up to 10%, meaning $7,700.

While the difference might seem small, it’s not. Following the same example, in the second year, someone without the exemption would pay $8,470, while someone with it would pay $7,426. In this case, the difference exceeds a thousand dollars, growing exponentially over time.

The good news is that in the upcoming general election, a referendum known as Amendment 5 will be on the ballot, proposing to adjust one of the $25,000 exemption increments based on annual inflation. For example, if inflation rises by 3%, the exemption increment would be $27,000 (+3%), offering a small relief to homeowners with a homestead exemption. Though it may seem minor, as we saw in the previous example, the savings can be substantial over the years.

In summary, if you own a home, apply for the tax exemption to reduce your payments. If you have questions or want to pay less on your property insurance, call Univista Insurance.