Given the increase in Miami-Dade County property values, this is extremely beneficial. It will keep property taxes at a reasonable rate of growth as opposed to a spike each year that we have a strong real estate market.
- You can only claim this exemption on a property that is your primary residence.
- The deadline to file is March 1st. It is best to just apply as soon as you can after closing.
PORTABILITY A BENEFIT IF YOU ARE BUYING A NEW PROPERTY
Miami also offers a homeowner who already has Homestead Exemption a benefit called Portability.
- This provides a homeowner the ability to transfer the Save Our Homes value up to $500,000 to a new homestead property purchase.
- This transfer or “port” is known as the Homestead Assessment difference.
- This is the difference between the Assessed and Market Value of a homeowner’s previous Homestead property.
So here’s a practical example, as this can certainly be confusing.
Let’s say you have owned a home for 5 years. On the tax roll, the market value is $1,000,000 and the Assessed Value is $700,000. This means you have a Save Our Homes Assessment Difference of $300,000. If you use portability to upsize and buy a home with a market value of $1,300,000, you would port over the $300,000 that you had on the other home and set your new Assessed Value at $1,000,000 to start. That’s a considerable tax savings!
If you downsize to a less expensive home with say an $800,000 Market value, there is a different calculation.
Step 1: you calculate your Save Our Homes Assessment Difference divided by your Previous Market Value, which equals your Cap Ratio.
Step 2: you calculate your Cap Ratio multiplied by your new home’s Market Value. In this example, it would look like this:
$300,000 / $1,000,000 = 0.3 Cap Ratio
0.3 x $800,000 = $240,000 PORT
$800,000 - $240,000 = $560,000 Assessed Value for your new home
For those downsizing to a less expensive home, a different calculation applies. You'll need to calculate your Cap Ratio and use it to determine the assessed value of your new property.
Miami-Dade has a resourceful website that explains these benefits to you—as well as some exceptions and limits—and allows you to apply online as well: miamidade.gov/pa/exemptions.asp
We know this can be daunting! Communicate with an experienced Realtor, attorney and/or accountant, and they can walk you through these steps, and help you understand the process.