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Bob

SoWal Insider
Nov 16, 2004
10,364
1,391
O'Wal
Cavallino said:
what does homesteaded mean?

we spend more than 6 months a year down there....should we do it?
what does it require and what are the benefits.

doug
It declares your primary residence and shelters you from large tax increases. "Save our Homes" is the part of the Fl. Constitution now and limits increases to 3 percent/year for those homesteaded here. Unfortunately the state now cost shifts over to those owning non-homesteaded [rental] property and newcomers by reevaluation to "market value ". Homesteaded properties are also reevaluated, but are capped to a 3 percent max upward adjustment. What a deal!
 

TooFarTampa

SoWal Insider
Homesteading is the way to go if you can do it. As Bob pointed out, the exemption of $25,000 of your taxable value is not the big deal, it's the fact that by law you are limited to increases of 3 percent of your assessed value annually. If you apply you must do so by (I believe) March 1 for the 2006 tax year. Camp Creek Kid said in another post that it is his understanding that assessments would go way up next year, so if you can the time to do it is now!
 

beachmouse

Beach Fanatic
Dec 5, 2004
3,504
741
Bluewater Bay, FL
SlowMovin said:
You can only have one property homesteaded at any one time. It is supposed to be your "permanent" residence (although when people split time between residences it is hard to say what is permanent). All that is required is proof of ownership and signing a statement swearing under penalty of law that this is the only property that is homesteaded. You are then exempted from some property taxes.

At least in Okaloosa (not sure about Walton or other counties) you do have to show other proof you live there. If you've got a car or cars, they're supposed to be registered to the homesteaded address, and your driver's license address is also supposed to list the homesteaded property. Florida does hit you with a $100/vehicle plate fee the first time you register a car in the state, but after that, annual tag charges are pretty reasonable- I think they're about half what we were paying in Tennessee, and for an extra $10/year or so, you can get one of the 150 different specialty plates available.
 

Smiling JOe

SoWal Expert
Nov 18, 2004
31,648
1,773
Bob said:
Homesteaded properties are also reevaluated, but are capped to a 3 percent max upward adjustment.
To add to Bob's correct statements, Save the Homes act kicks in only after two years (I think) of claiming the property as your Homestead. Durning the first two years, the increase is not capped at 3%.
 

Smiling JOe

SoWal Expert
Nov 18, 2004
31,648
1,773
Bob said:
It declares your primary residence and shelters you from large tax increases. ...

No one mentioned it on this thread, although I believe Bob may have touched on it in his statement above. The big savings comes in capital gains when you sell your primary home. If you meet the qualifications, which include owning and living in your home as your primary(homesteaded) residence for two out the last five years, you are exempt from the gains on up to $250K for a single person or up to $500K for married couples. It will not apply to property not used as your primary residence. See your accountant for further explanation. It is almost as cut and dry as I am stating, but perform your DD and see your accountant if you are interested in learing more.

eg- Let's say you and your spouse meet the qualifications required, and you paid $500K for your homesteaded beach house, in which you lived for the last two years. You sell your house for $1Million. You pay Uncle Sam $0 in capital gains on your "investment." If you sold that house within the first year of onwership for $1M and your tax rate was 25%, you would owe Uncle Sam $125K on that sale.
 

SlowMovin

Beach Fanatic
Jul 9, 2005
485
42
Smiling JOe said:
If you sold that house within the first year of onwership for $1M and your tax rate was 25%, you would owe Uncle Sam $125K on that sale.
I was under the impression that you are taxed under long-term capital gains which are currently capped at 15%. Am I mistaken about that?
 

ShallowsNole

Beach Fanatic
Jun 22, 2005
4,292
849
Pt Washington
Having just returned to my office from the Property Appraiser's office (to prepare myself for the worst),I am very, very grateful that I live here, managed to build our home when we did and now fall under Save Our Homes. I am also glad I do not work over there today. :blink:

It is my understanding that the millage has actually dropped, but appraisals are up - WAY up. As the market value of your property increases, so do your property taxes. Where it hurts is for folks like me, and probably you, who have no desire to sell your property.

One thing I haven't seen mentioned on this thread is that, if you declare homestead exemption here, you cannot legally rent your home here. At all.
 

Smiling JOe

SoWal Expert
Nov 18, 2004
31,648
1,773
SlowMovin said:
I was under the impression that you are taxed under long-term capital gains which are currently capped at 15%. Am I mistaken about that?

The 15% cap applies to long-term investments only, ie- investments held more than one year. Any investments sold before inside the first year, are taxed as ordinary income, which was the example I used.

Shallowsnole is correct on the rental info on Homesteaded property, but the tax savings may benefit you more than the rental income in the end. I know they don't help with cash flow, which most folks are after.
 

TooFarTampa

SoWal Insider
SlowMovin said:
I was under the impression that you are taxed under long-term capital gains which are currently capped at 15%. Am I mistaken about that?

As SJ said, the higher tax rate (your income tax rate) would apply only during the first year of ownership. After the one-year mark, the capital gains tax of 15 percent would kick in. That is, unless it was your primary residence as SJ noted above.
 

Kim Smith

Beach Lover
Nov 16, 2004
71
3
They told me at the office yesterday that the housing aspect has not increased but the land has increased tremendously over the past year in Walton County. My taxes have gone from $3900 in 04, to $6300 in 05 and this next year it has risen to 11,000. We cannot homestead our home because we do rent and it is truely our second home. What are our chances of an appeal and does anyone know the process to do one in the state of Florida?
 
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