The Amendment to Florida Constitution in 1992 limited the annual increase in the assessed value of the properties receiving homestead exemption to either 3% of the CPI (Consumer Price Index), whichever is lower. It is called "Save Our Homes" (SOH).
It does not limit property taxes, it just caps the the increase to the assessed value.
Every Florida Resident, who owns a primary residence and has homestead exemption, qualifies for SOH cap. Interestingly enough, if a homeowner owns an adjacent vacant lot, at his request it can also be covered by SOH cap.
There are cases of partial homestead, where either out of two owners only one receives homestead, or the property is a duplex with only one side is used as primary residence and the other side is rented, the SOH will apply only to the portion of the property with homestead.
If you look at our county records, you will see under values: Just Value, and Assessed Value. The properties that have homestead, will be showing a much lower assessed value due to homestead exemption. For example a property showing today just value of $169,920 has an assessed value of $119,920. That's a $50,000 difference (the exemption amount has been changed in Florida Constitution in 2008).
When the sale occurs, 1st of January of the next year the assessed value reverts to Just Value.
What is important to understand is that even when the values are falling, you tax may still be increasing. How come? While taxes are decreasing now, and those, who have SOH for years, could see an increase of their taxes? Yes. It is called the Recapture Rule, which is in force since 1995. What happens is that thought the value has decreased, but if the assessed value before homestead is still lower than the just value, then the tax will increase to 3% this year.
This is what happens to people these days. For several years their taxes were going up only slightly (under 3% a year) while values were increasing by double digits. They have accumulated a lot of cushion. So now, when the values are falling, their tax is still calculated of lower base than the just values, and therefore their tax is going up by 3%.
If you would like to get the tax benefit of homestead and SOH provision of the Constitution, call me at 386-405-4408.