How Florida's Save Our Homes Cap Works

Save Our Homes is part of the Florida Constitution, in effect since 1995. Once your home has a homestead exemption, its assessed value (the number your taxes are based on) can only go up by 3% a year, or by the rate of inflation if that's lower.

Your home's market value can rise much faster than that. Save Our Homes doesn't care. The taxable value keeps climbing slowly, and the gap between what your home is worth and what you're taxed on grows every year.

A few things to know:

• It only applies to your primary residence with a homestead exemption.
• It limits the growth of your home's assessed value, not your actual tax bill. If local tax rates go up, your bill can still go up.
• Your assessed value can never be higher than your home's market value.

A simple example

You buy a home for $300,000 and file for homestead. Over the next 10 years, the market pushes its value to $450,000. With the 3% cap, your assessed value is closer to $400,000 or less. You're paying taxes on the lower number every year you own the home.

This is the one that surprises buyers the most.

When a home sells, the Save Our Homes cap resets. In the year after you buy, the property appraiser reassesses the home at its full market value. All the savings the seller built up over the years go away with the sale.

So if the seller has owned the home for 15 years, their tax bill could be a fraction of what yours will be. When we help you budget for a home, we estimate taxes based on the purchase price, not the current bill.

Second homes and investment properties don't get Save Our Homes. They have a separate 10% annual cap on assessed value, and that cap doesn't apply to school taxes.

If you already own a homesteaded home in Florida, you don't have to lose your Save Our Homes savings when you move. Portability lets you transfer up to $500,000 of that savings to your next Florida homestead, in any county.

Moving up to a more expensive home

You can bring the full savings with you, up to $500,000.

Example: Your current home is worth $400,000 and assessed at $250,000. That's $150,000 in savings. You buy a new home for $500,000. Your new assessed value starts at $350,000 instead of $500,000.

Downsizing to a less expensive home

You bring a proportional share of your savings.

Example: Same current home, $150,000 in savings on a $400,000 home (37.5% of its value). You buy a $300,000 home. You bring 37.5% of $300,000, which is $112,500. Your new assessed value starts at $187,500.

The deadline

You have to establish homestead on your new home within three tax years of January 1 of the year you gave up your old homestead. Not three years from the sale date. File for portability when you file for your new homestead exemption, by March 1.

Save Our Homes and portability only apply to Florida homesteads, so you'll start fresh. Your first homestead year sets your starting point, and the 3% cap protects you from there.

That's why filing for homestead on time matters so much. Miss the March 1 deadline and you lose a full year of the exemption and the cap.

[TO BE ADDED AFTER NOVEMBER 3 RESULTS]