Everything You Need to Know About Portability in Florida

Portability in Florida gives homeowners the unique advantage of transferring their Save Our Homes (SOH) tax benefit from one property to another. This benefit allows you to preserve part of the tax savings from your previous homestead when you purchase a new one. Let’s break it down in detail.

What is a Homestead Property in Florida?

A homestead property in Florida is a primary residence that qualifies for special legal protections and tax benefits under the state's homestead exemption laws. To be classified as a homestead, the property must be the homeowner’s permanent residence as of January 1 of the tax year. Homestead properties are eligible for the Florida Homestead Exemption, which reduces the property's taxable value, lowering property taxes. Homestead properties in Florida are also protected from forced sale by creditors, except in cases like unpaid property taxes or mortgages. Only homestead properties are eligible for the Florida Save Our Homes (SOH) tax benefit. 

What is the Save Our Homes (SOH) Amendment?

The Save Our Homes (SOH) amendment to the Florida constitution was enacted in 1995. It provides a tax benefit by limiting an increase in the assessed value of a homestead property to 3% annually or a change in the Consumer Price Index (CPI), whichever is lower. This cap helps protect homeowners from sudden spikes in property taxes as market values rise. The difference between the market value and the capped assessed value creates the SOH benefit, which can be transferred to a new homestead property using portability.

What is Portability?

Portability works in conjunction with the Save Our Homes (SOH) amendment by allowing Florida homeowners to transfer the tax savings accumulated from the SOH cap to a new homestead. When you move to a new home, portability lets you transfer that SOH benefit (the difference between the market value and capped assessed value), reducing the taxable value of your new property.

How to Qualify for Portability

To qualify for portability in Florida, you must have had a homestead exemption on your previous property and establish a new homestead within two years of abandoning the old one. This allows you to transfer the SOH benefit tax savings from your old home to your new one. The maximum amount you can transfer is $500,000, depending on the difference between the market value and the assessed value of your previous home under the SOH benefit.

When you move to a home of equal or greater value (upsizing), you can transfer the full SOH benefit to the new property. For example, if your previous home had a market value of $400,000 and an assessed value of $250,000, the $150,000 difference can be transferred to reduce the taxable value of your new home.

On the other hand, if you are downsizing to a property with a lower market value, the benefit is prorated. In this case, you only transfer a percentage of the SOH benefit based on the relative values of both homes​.

The Application Process

Portability in Florida isn’t automatic, so homeowners need to take specific steps to transfer their SOH tax benefit. You must file a Transfer of Homestead Assessment Difference (DR-501T) form, typically submitted alongside your Homestead Exemption (DR-501) form. These forms can often be completed online, as is the case with the St. Johns County Property Appraiser’s Office, or filed in person. Be sure to check your local property appraiser’s website for instructions on how to file both applications correctly.

The Importance of Deadlines

In Florida, establishing a new homestead and transferring your SOH benefit through portability are two related but distinct processes with separate deadlines. To qualify for portability, you must establish your new homestead by applying for the homestead exemption within two years of abandoning your previous homestead. This ensures that your new home is eligible to receive the tax savings.

In addition, you have three years from January 1st of the year you abandoned your old homestead to apply for the portability benefit. If you miss this deadline, you forfeit the SOH benefit, meaning your new home will be taxed at its full market value. This could significantly increase your property tax bill, so it's crucial to file both the homestead exemption and the portability forms on time.

Common mistakes include missing the three-year portability deadline or assuming portability is automatic. You must file a separate application for portability alongside your homestead exemption. 

Conclusion

Portability in Florida is a powerful tool that allows homeowners to carry their SOH benefits from one homestead to another. Whether you’re upsizing or downsizing, being aware of the eligibility requirements, deadlines, and potential savings can make a significant difference in your annual property tax bills. If you're planning a move or have questions about how portability works, feel free to reach out.