A great motivation for obtaining Florida residency is the range of tax advantages that it brings.

When considering whether to purchase a retirement home, property taxes are a big part of the decision. That reasonably-priced home in the perfect neighborhood won’t seem like such a bargain if the property taxes are sky-high. On the other hand, a home that’s priced at the top end of your budget could become a bit more affordable if you understand the local tax laws.

Florida is one of those states where it pays to know how property taxes work. The Florida homestead property tax exemption gives residents a discount on their primary home’s property taxes. This law was first put on the books during the Great Depression to make Florida property more affordable for the people who were settling and building businesses in this fast-growing state. It has been a popular policy for decades and in the 1980s, it became part of the Florida state constitution.

People who come to visit world-class Villages of Citrus Hills are often impressed by the exceptional quality of construction, well-kept facilities and wealth of amenities. Visitors interested in buying property here often wonder if the bottom-line cost for all they get is within their reach. When going over the numbers with potential buyers, we make sure to cover local taxes and the Florida homestead exemption with them. We want them to know that when you purchase a home in Florida and make it your official residence, you could be eligible for this property tax exemption even if you own other homes.

The Homestead Exemption by the Numbers

Property taxes in Florida work like they do in most states. Homes are given an assessed value and homeowners are taxed on this value based on the property tax rate, known in Florida as the millage rate. Local elected officials set these rates for the year based on the budgets they create for municipal and school services. Florida millage rates are set by city and county boards, school boards and special districts.

If you own a Florida home with an assessed value of $260,000, here’s how you would figure out your property taxes:

$260,000 x 7 millage rate for school taxes (.007) = $1,820

$260,000 x 11 millage rate for city, county and special district taxes (.011) = $2,860

Total property taxes for the year = $4,680

Remember, these numbers are before any Florida tax discounts or exemptions are applied.

The Florida homestead exemption reduces the assessed value of a home by $25,000 for the school taxes and $50,000 for the remaining taxes, so this $260,000 home would largely be taxed as if it were a $210,000 home. Here’s a closer look at the numbers.

$260,000 - $25,000 homestead exemption = $235,000 x .007 school millage rate = $1,645

$260,000 - $50,000 homestead exemption = $210,000 x .011 non-school millage rate = $2,310

Total taxes = $3,955

That’s nearly $1,000 in savings for one year!

More Ways to Save at Citrus Hills

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If you are granted a homestead exemption, you are eligible for further property tax savings through the Save Our Homes Amendment to the Florida Constitution. In a stunning show of foresight, Florida residents in 1992 voted in favor of a constitutional amendment that puts a cap on the amount a home’s assessed value can increase each year. The reasoning was that when the real estate market is hot and home prices increase quickly, this amendment would protect residents from seeing major jumps in their property taxes that they cannot afford to pay.

With a homestead exemption, the assessed value cannot increase more than 3 percent, or the rate of inflation, whatever is less. This savings continues as long as you keep the home as your main residence and in many cases can be transferred if you purchase a new home in Florida.

Although the first-year tax savings through a Florida homestead exemption may only save you a few hundred dollars, the long-term savings can be significant, especially when compared to the property tax payments you would be making in other states without this kind of tax relief. 

How to Qualify for Savings

We at Citrus Hills often talk to people who live in colder climates that have always dreamed of spending their winters in Florida and the summers up north. Living that lifestyle doesn’t mean you don’t qualify for a homestead exemption. But it does mean you will need to make Florida your home.

Florida homestead exemptions on property taxes are only available on a person’s primary home, or permanent residence, which is defined as “that place where a person has his or her true, fixed, and permanent home and principal establishment to which, whenever absent, he or she has the intention of returning.”  It does not apply to a rental property, business or second home.

To receive a homestead exemption, an application must be filed with the Property Appraiser in your county by March 1 of the tax year. As part of the application process, your property appraiser may ask for any of the following items to prove your residency:

Previous residency outside Florida and date ended
Florida driver license or identification card number
Evidence of giving up driver license from other state
Florida vehicle tag number
Florida voter registration number if U.S. citizen
Declaration of domicile, residency date
Current employer
Address listed on your last IRS return
School location of dependent children
Bank statement and checking account mailing address
Proof of payment of utilities at homestead address

While this can be a tough decision for some, there are additional benefits to making Florida your home besides the good weather. Florida doesn’t have an income tax, which means additional savings if you change residency from an income tax state.

Other Tax Benefits

For many of our residents, owning property in Citrus Hills isn’t just an investment, it’s a place to call home and enjoy life for years to come. If you are also considering making a long-term move to Florida, there are a number of other ways to save on property taxes.

People 65 and over: If you are a permanent resident of Florida, you can get a property tax exemption up to $50,000 on your primary home. There are a number of conditions to apply, such as income limitations, and the benefits can vary from county to county.

Widow or widower: Any widow or widower who is a Florida resident may claim a $500 exemption.

Disabled or blind person exemption: If you are a Florida resident and are blind, or “totally and permanently” disabled, you may claim a $500 exemption.

Why Choose the Villages of Citrus Hill?

With retirement come lots of new freedoms, like sleeping late, traveling or enjoying your favorite activities any time you’d like. Where better to enjoy those freedoms than here at Citrus Hills, in the heart of Florida’s Nature Coast? Cool breezes from the Gulf of Mexico and a higher elevation ease the heat and create a comfortable climate that averages between 65 and 75 degrees most of the year. Three top-tier golf courses, a tennis center and incredible fishing, hiking and boating will keep you busy every day. Our residents often say that the friendly neighborhoods and reasonably priced, high-quality homes make living at Citrus Hills the very best decision they’ve ever made.

As you consider where to put down roots in retirement, there will be a lot to consider, especially when it comes to managing your money. Unexpected costs, like a steep increase in your property taxes, can be a big set-back. In most states, there are no regulations to keep rising taxes in check, but Florida saw the benefit of regulating property tax increases in the state constitution, making the cost of owning a home in Florida a little more affordable and a little more predictable.

As you continue your search, remember that Florida is more than just a beautiful location with great weather. It’s a place where retirement can be enjoyable and affordable.