Congratulations! You've read Your First Home Purchase Part I and Part II and taken the advice to heart. Now you’re a first-time home owner in Miami, FL and you’re settling into your new place. The first year of home ownership brings many changes – new commute to work, new paint on the walls, and perhaps some remodeling. It’s an exciting season as you make your house a home, and start a new chapter in life while building personal equity.
But one thing that can get lost in the excitement is remembering to file for your Florida Homestead Exemption! Not filing for a the exemption will likely cost you money.
A Homestead Exemption accomplishes three main things — it reduces your property tax bill, protects you from creditors, and protects a surviving spouse when the other home owner dies.
Reduce your taxes with a Homestead Exemption
Florida allows up to $50,000 in Homestead Exemption for married couples on their primary residence. It is $25,000 for single home owners. Consequently, this reduces the value of your home for the assessment of property taxes.
The assessed value is almost always less than the fair market value of your home. For example, if the home of a married couple is assessed at $400,000, property owners who claim a Homestead Exemption pay taxes on a home value of $350,000. The same home may very well have a market value well north of the assessed value.
Additionally, claiming your exemption qualifies home owners for additional benefits under the Save Our Homes amendment in Florida. To estimate your property taxes, the Miami-Dade Tax Appraiser has a helpful calculator on its website.
Protection from creditors
Claiming a Homestead Exemption protects you and your family from creditors, such as a judgement against you to repay an outstanding loan. If creditors have a claim against you, they cannot force the sale of your primary residence to satisfy payment of the debt. In other words, you won’t go homeless in Florida to satisfy creditors looking to get repaid. This Florida law doesn’t necessarily apply if the judgement against you pertains to mortgage payments or unpaid property taxes. If this is your situation, consult with an attorney about your options.
Does a surviving spouse get to keep the Homestead Exemption?
Don’t assume that a Homestead Exemption is not affected after the death of a spouse. Homestead Florida laws are tricky when there is a death and possible distribution. The answer is different depending on whether there are minor children, whether there was a prenuptial agreement, etc. We strongly recommend discussing the topic of your Homestead Exemption with an estate planning attorney.
If you satisfy the above points, you must apply by March 1st to get the Homestead Exemption for that year.
In Florida you have to claim a Homestead Exemption – that is, it is not automatic. In Miami-Dade County, you can claim your exemption online on the Miami-Dade Property Appraiser website.
Check out Jonathan's piece on 7 Financial Life Hacks While Living in Miami. Questions? Feel free to get in touch with us at [email protected] Also follow us LinkedIn, Facebook, Instagram, and YouTube for more personal financial information relevant to you!