By Frank Desguin, Charlotte Sun-Herald Newspaper. Reprinted with permission. January 27, 2007

As most everyone knows, for the past several years, Florida’s real estate market was a “hot bed” of activity, particularly in Charlotte County and southwest Florida. Since Florida law requires the property appraiser to revaluate all property at 100 percent of fair market value each year as of Jan. 1, the result has been rapidly increasing tax roll values. Consequently, property owners have understandably become more aware of their property’s appraised value relative to that of others.

That fact, coupled with the ability to readily access Charlotte County’s tax roll records on the office Web site, www.ccappraiser.com, often leads to questions concerning what may appear to be inconsistencies, but actually result from Florida law. For instance, how can certified assessed value vary so much for comparable properties, and what’s the difference between certified just value and assessed value?

Although for years the terms “just value” and “assessed value” have been used interchangeably when referencing a property’s market value on the tax roll, they have not meant the same since 1995. That is the year the Save Our Homes limitation associated with homestead exemption began affecting a property’s assessed value. As previously stated, Florida law requires determination of just (market) value for all property each year as of Jan. 1, based on market activity the prior calendar year. However, the assessed value of a property receiving homestead exemption can only increase a maximum of 3 percent each year, beginning the second consecutive year the exemption is granted, regardless of any increase in just value indicated by market sales. In addition, assessed value can never exceed just value.

For example, suppose a home’s just (market) value in year one is $150,000 and the owner is granted homestead exemption. Even if sales activity indicates the property’s just value increases 10 percent to $165,000 in year two, its assessed value in year two could not exceed $154,500, a 3 percent increase over $150,000. The increase could be less depending on the Consumer Price Index.

If there is new construction, such as adding a bathroom or swimming pool, the additional market value must be added to the current year’s SOH limited value. The $25,000 homestead exemption is then deducted from assessed value, yielding a $129,500 taxable value, the amount to which local taxing authorities apply their millage (tax) rates determined by their revenue needs. The just, assessed, and taxable values of similar properties without homestead exemption would all be $165,000.

If sales activity the following year indicates another 10 percent increase, year three’s just (market) value would be $181,500 and assessed value no more than $159,135. Again, absent any new construction. As one can see, the longer homestead exemption is maintained at a particular residence, the greater the SOH benefit becomes in a rising real estate market. Consequently, even though similar properties may have very similar just values, which would be expected, their assessed and taxable values can vary greatly depending on whether or not, and how long, the owner has received a homestead exemption at that location.

Speaking of homestead exemption, I’d like to clear up the common misconception that a certain length of physical presence or yearround residency is necessary to qualify. Florida law has no such requirement. The requirements as of Jan. 1 are; applicants own the home, provide evidence it is their permanent residence and Florida is their state of permanent residence, a tax benefit is not received in another state based on residency there, and a timely application is filed by March 1.

In addition, if property owners receiving homestead exemption move during the year, the exemption must remain on the home for that year, since it was their residence on Jan. 1, the “snapshot” date. However, the following year, that exemption is removed and a new application at the new residence is required. Unfortunately, under current law, the SOH benefit cannot be transferred to the new home, but that may change during the 2007 legislative session beginning in early March.

Frank Desguin

If anyone has questions concerning homestead or other exemptions available under Florida law, please contact the office at 941-743-1593, or records@ccappraiser.com. Remember, March 1 is the filing deadline.