With so many recent new residents in Coral Gables and nearby areas, I thought I’d remind you of Miami-Dade’s valuable Homestead Exemption program. One of the program’s benefits is that it allows residents to save up to $50,000 on the home’s taxable value each year. The second and more impactful benefit provided by the program is called the Save Our Homes Cap. Over the course of homeownership, this will yield substantial peace of mind and savings. In essence, this will limit the annual increase of the assessed value of your home to 3%. Given the incremental 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 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 by March 1. It is best to just apply as soon as you can after closing so you don’t forget!
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 five 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 will 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 × $800,000 = $240,000 port
$800,000 – $240,000 = $560,000 assessed value for your new home
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.
I 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.