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What is PMI or MIP mean in Real Estate? Piece of the Real Estate Puzzle

Homestead Portability How does it work St Lucie County Florida

Ok to continue with the Property Tax theme from a couple of weeks ago.
Another question I get from time to time is how the Homestead portability works?  Again this is a very complicated topic and I would have you get any info on your personal situation directly from the Property Appraiser's office www.paslc.org but here is my shot at trying to simplify it as much as I can for understandability.

First, if you didn't already know, if you had a homestead exemption on your prior property you can (and should) port the exemption to the new property. The reason why this is important instead of just applying for a new $50,000 exemption is because in Florida, the assessed value that can be taxed is only allowed to increase by a max of 3% a year.

I will use my own recent personal property buying/selling experience as an example (I am going to round numbers for ease).
We purchased our prior home at the bottom of the market for $75k in 2010. We sold our home in 2017 for $275k. Now the property appraiser's value is almost never the same as market value and usually much lower (I think most would all agree this is a good thing!). At the time of sale (2017) our home was valued by the property appraiser at $165k but since it had been being capped at no more than 3% increase for the past 7 years it was only assessed at $105k -$50,000 exemption= taxed at $55k. This made our Portable value $60k (165k-60kcap=105k). Now we purchased our new home for only $15k more at $290k. It had been purchased by the prior owners at the top of the market (2005) at $348k the appraised value does not fall as fast as it rises so when we purchased it the property appraiser had it valued at $245k we got to port the $60k exemption so our assessed value is now $245k-$60kportable cap=$185k-$50k homestead exemption= taxed on $135k.

I was very surprised when I got that new tax bill because we had only paid $15k more for the home than we had sold our prior for, why did my taxable value go up $80K? I called and was told that I was lucky I had the portability because I would have been taxed on $195k if not for that additional $60k ported exemption! (didn't feel so lucky).

So the moral of this story is that yes, you can port your cap, and it is a very useful and important discount.  But be aware of the assessed value of the home you are purchasing compared to the assessed value of the home you sold even if they are almost the same price. You also should note that you have 2 years to use the portability. You can rent for a year in between but you must use it by the 2nd year or it goes away.

I love to help buyers and sellers navigate the Real Estate world you can call me anytime to pick my brain (No Charge! ).
Dawn Burlace, PA, Realtor®
Atlantic Shores Realty Expertise
Serving the Treasure Coast of Florida
(Indian River, St Lucie, Martin and Northern Palm Beach Counties)
772-444-6696
www.MoveToStLucie.com

Here is the explanation on the Property Appraiser's website. A good resource but very vague when it comes to real life numbers.

Portability in Florida refers to the ability of a property owner to transfer some or all of the Save Our Homes benefit on a previous homestead to a newly established homestead. The law was passed as a constitutional amendment in January 2008. The Save Our Homes benefit is the difference between the market (or just) value and assessed value. State law allows you to transfer your Save Our Homes benefit to a new home if you claimed the Homestead Exemption in either of the two preceding tax years. Important points to consider when filing for Portability:

• To transfer your assessment difference you must have received a homestead exemption on the previous Florida homestead property in either of the two preceding tax years and must be an owner of the new Florida homestead property.
• If you and your spouse (or former spouse) would like to designate shares of the homestead assessment difference then you must file a DR-501TS DESIGNATION OF OWNERSHIP SHARES form before you file your portability application.
• To transfer your assessment difference you must have established a new homestead on or before January 1 within two tax years after abandoning your previous homestead
  • (Example: for a homestead abandoned in 2017, you must qualify for the new homestead in either the 2018 or 2019 tax year. If you don’t understand this requirement, please contact our office.)
• You should file for Portability at the same time you apply for the new homestead exemption. Applications should be filed by March 1. You can file in either of our office locations or online.
• The amount is either transferred in its entirety or as a percentage depending on the value of the new property. The maximum transfer amount is $500,000.

Per Florida Statute, the portability benefit is calculated as follows:

https://www.paslc.org/index.php/learn/

I love to help buyers and sellers navigate the Real Estate world you can call me anytime to pick my brain (No Charge! ).
Dawn Burlace, PA, Realtor® Atlantic Shores Realty Expertise
772-444-6696

Florida's housing market: Pending sales, median prices up in March 2019

Great news! Florida's Housing Market is strong! Of course it is, we have NO state income tax, NO snow, miles of beaches, The Orlando Theme Park center. Friendly, fun, come live where others vacation!
Fla.’s housing market: Pending sales, median prices up in March


Dawn Burlace, PA, Realtor®

Atlantic Shores Realty Expertise

772-444-6696

www.MoveToStLucie.com

Fla.’s housing market: Pending sales, median prices up in March

Why do Property Taxes Vary on the same priced Homes?

Ok so I have to answer this question multiple times a week so I think there is a need for more public information on this highly confusing topic.

As a Real Estate Professional this is my simplified way of making sense of it. All numbers are approximate and the only way to get the closest property tax estimate based on the individual's circumstances and the individual property is through the Property Tax appraiser.  www.PASLC.org you can use the Property Tax Estimator but this gives a range. You would actually have to speak to a clerk and give the property address, and your exemption situation to get a truly close estimate. Even then they don't know what governments are going to do with budgets and tax rates and what your home will actually appraise at when it is reevaluated. So the best you can hope for is to get close. 

The way the property taxes work on real estate purchases is very complicated. But here is my best shot at helping you understand. If someone purchases a home say in 1985 for 75k and they live in it full time (6+months) and homesteaded it. They would be capped at no more than 3% inflation a year on taxable value so their home might be worth 200K in market price but can only be taxed at say 100k minus the 50k deduction so they may only have a 1k tax bill. Now someone that bought the same exact home at the same exact time as a vacation or rental home. They would have no exemptions or deductions (however currently there is a 10% value increase cap per year) so they would be taxed at the full 200k and have a tax bill of 4k. 

What this has to do with your purchase of the home is that when the bills come out in Nov they will be based on who owned the home Jan 1 of the year current year. So if you purchased the home with the1k tax bill and closed on May 1st your taxes at closing would be prorated from May 1st to Dec 31 based on the last tax bill (the seller would give you a credit for Jan1-April 30). Or the same for the home with the 4k tax bill. You purchased both for 200k but the taxes FOR THIS YEAR ONLY would be based on prior owner. This also makes a difference when getting a loan as the bank uses the last tax bill for amount to collect to start escrow account and collect monthly for escrow account to pay the bill at the end of the year.  

Now as of Jan 1, 2020  you would own the home and it would most likely be assessed for the purchase price or close to it so your tax bill from there on out would be based on 200k minus homestead exemption if you use as primary residence for 6+ months and so your bill in that situation with standard homestead exemption would be aprox 3k a year. 

All these numbers are aprox but pretty close to reality. 

NOTE: One pitfall to keep an eye out for is that in the case you purchase a home with a low tax bill and the mortgage company only collects escrow based on that bill. The first year you of course would be fine but the next tax year you would end up with a shortage at the end of the year when the tax bill came due and the mortgage company will assess your account the $2000 difference as well as start collecting the correct amount on your monthly bill for escrow so your mortgage payment in this scenario would jump up $333 a month until the shortfall was made up. Then once your account shortage was paid up you would start paying the additional correct amount of $166 more towards taxes.  

There are some special taxing districts, some special assessments, advalorm taxes and some areas with county only taxes as well as there being additional exemptions available but this is the general idea. 

On any home I can let you know the situation by looking it up on the County Tax Records.  

You can call me any time for questions regarding Real Estate on the Treasure Coast of Florida 

(Indian River-St Lucie & Martin Counties). 

Dawn Burlace, PA, Realtor® The Burlace Team - Atlantic Shores Realty Expertise

772-444-6696 bus

954-707-0437 cell 

dawnburlace@gmail.com

www.MoveToStLucie.com

353 NW Bayshore Blvd Port St Lucie FL 34983 RX-10446922

For Sale - 442 SW Friar Street Port St Lucie Florida 34983 31x33 Garage