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Understanding
the "Save our Homes" |
1. What does the "Three Percent Cap" mean to Florida residents?
2. Is the "Three Percent Cap" a limitation on taxes?
3. Who qualifies?
4. Does the "Three Percent Cap" change the way property values are estimated by
the Property Appraiser?
5. What is the difference between Market Value and Assessed Value?
6. What are the base year and the base values?
7. What happens to the cap with a change in ownership?
8. Are all deed transfers considered a change in ownership?
9. If my assessment goes down will this lower my base value?
10. If I file a petition with the VAB what happens?
11. What happens with the "Three Percent Cap" when a property owner wants to
combine two adjacent properties or, the opposite case where a property is
divided or made smaller?
12. What happens if I combine my vacant lot with my home?
13. How does the "Three Percent Cap" affect properties like duplexes?
14. How will the "Three Percent Cap" affect Homesteaded commercial properties?
15. How does the "Three Percent Cap" affect split ownership?
16. What happens with new additions and renovations?
FAQ ANSWERS
1. Q. What does the "Three Percent Cap" mean to Florida residents?
A. The three percent cap is known as "Save Our Homes" (SOH) and was a
constitutional revision that took effect January 1, 1995 which annually limits
the increase in the assessment of homesteaded properties at 3% or the Consumer
Price Index (CPI) which ever is less.
2. Q. Is the "Three Percent Cap" a limitation on taxes?
A. No, it is a cap on the assessment of the parcel, not the taxes paid. In other
words, the assessment could stay the same or go down and yet the taxes through a
millage increase could go up.
3. Q. Who qualifies?
A. You must have a property with a homestead exemption (please visit our web
site for homestead exemption requirements). All other properties are not subject
to the cap. Approximately 1/2 of all residential properties do not have
homestead and are not subject to the cap.
4. Q. Does the "Three Percent Cap" change the way property values are estimated
by the Property Appraiser?
A. No, the responsibility to estimate the market value of the property is still
paramount to our responsibilities.
5. Q. What is the difference between Market Value and Assessed Value?
A. Market Value and Assessed Value have new meanings and are not necessarily the
same. Assessed Value - is the capped value as limited by the Three Percent Cap.
6. Q. What is the base year? And what is the base value?
A. The base year is the first year that you file and receive a homestead
exemption.
Example: You buy a home in July, 2003 and file for homestead exemption in
January or February 2004. The base year is 2004, the year you received the
homestead exemption. The base value is the property assessment as determined by
the property appraiser for the 2004 Tax Roll.
7. Q. What happens to the Homestead Exemption and "Three Percent Cap" on the
property if a change in ownership occurs?
A. If you sell the property then the homestead exemption is removed and the
assessed value (capped value) increases to the market value based on market
activity and as estimated annually as of January 1st each year by the Property
Appraiser.
8. Q. Are all deed transfers considered a change in ownership?
A. No. Some deed transfers are simply to correct names, allow for divorce or for
death in the family. These non-market oriented deed transfers are not considered
a change in ownership. The following list of situations does not constitute a
deed transfer.
1) transfer to correct an error
2) transfer between legal and equitable title
3) transfer between husband and wife
4) transfer due to dissolution of marriage (providing the transferee applies for
Hx)
9. Q. If the homestead assessment goes down will this lower the base value?
A. Maybe. Remember, market and the assessed value may not be the same. If the
Market Value is substantially higher than the capped Assessed Value a reduction
in the market value may have no impact on the assessment. If the market value is
reduced from $125,000 to $115,000 there will be no relief to the property owner
if the capped assessed value was only $100,000.
10. Q. If I file a petition with the Value Adjustment Board (VAB) and receive a
reduction, will the new lower value be the new base value for the next year?
A. Maybe, as in question 9 above, market value and the assessed value may not be
the same. If the market value is substantially higher than the capped assessed
value a reduction in the market value may have no impact on the assessment. If
the market value is reduced from $125,000 to $115,000 there will be no relief to
the property owner if the capped assessed value was only $100,000.
If the VAB upholds the petition and the petitioner's estimate of value is less
than the assessed value, then the petitioner's estimate becomes the new base. If
the VAB upholds the petition and the petitioner's estimate of value is less than
the market value but greater than the assessed value then there is no change
from the base.
Example A:
A Homesteaded property has a market value of $100,000 and a capped assessed
value of $80,000. The property owner files a petition for $75,000 and the VAB
upholds the petition. Since the petitioned market value of $75,000 is less than
the assessed value of $80,000 then the $75,000 becomes the market and new base
assessed value.
Example B:
A Homesteaded property has a market value of $100,000 and a capped assessed
value of $80,000. The property owner files a petition for $90,000 and the VAB
upholds the petition. Since the petitioned market value of $90,000 is greater
than the assessed value of $80,000 then the $80,000 remains as the base assessed
value. The petitioner would not receive tax relief.
11. Q. What happens with the "Three Percent Cap" when a property owner wants to
receive a tax bill for two adjacent properties or, the opposite case where a
property is divided or made smaller?
a) combinations
b) splits and cut-outs?
a. Combinations: A property owner has a homestead exemption on the property and
wants to combine an adjacent vacant lot. The market value of the vacant lot is
added to the assessed value (capped value) of the Homesteaded property. The new
value becomes the base value for the next year.
Example: A residence with a homestead exemption has a market value of $75,000
and an assessed (capped) value of $60,000. The adjacent vacant lot also has a
market value of $25,000. The combined capped value of the property is $85,000 or
the total of $60,000, the assessed (capped) value plus the $25,000 market value
for the vacant lot.
Please keep in mind that this applies to residential type properties. A
homesteaded property cannot expect to receive a cap on the commercial,
industrial or agricultural portion of a property.
b. Splits and cutouts: A homesteaded parcel is split into two new ownerships.
The parcel retaining the homestead stays at the capped value with a deleted
portion percentage estimated and applied to the capped value for a reduction to
the base for the next year. The deleted portion percentage should be based on
the assessed (capped value of the land).
Example: A homesteaded residence on two lots has a market value of $150,000. The
capped assessed value of the property is $120,000. The owner wants to sell one
of the lots currently capped. The market value of each lot is $30,000. The
assessed value is 80% of market value ($120,000/$150,000= .80). Therefore, the
reduction in the capped assessed value is 80% of the market value of the land in
the cutout, or $24,000 ($30,000 x .80= $24,000). Since the assessed value before
the cutout is $120,000 the new assessed value after the cutout is $96,000. The
market and assessed value of the cut out lot is $30,000.
12. Q. I own a single family residence and have a homestead exemption. I also
own the adjacent vacant lot under a separate property parcel number. What
happens if I combine the vacant lot with my home? Will the new combined parcel
be covered by the "Three Percent Cap"?
A. Yes. As previously noted the market value of the vacant lot will be added to
the capped assessed value of the residence and the combined value will become
the new base for the assessment roll the following year.
13. Q. I own a duplex and live in one side and rent the other unit. Will all of
my property qualify for the "Three Percent Cap"?
A. No. Only the Homesteaded portion will be under the "Three Percent Cap". The
homesteaded portion would be determined as a percentage of the total property
value.
Example: A property owner occupies ½ of a duplex. The ½ of the assessment with
the homestead is subject to the "Three Percent Cap". The ½ of the assessment
without the homestead is not subject to the cap.
14. Q. How will the "Three Percent Cap" affect the assessments for homesteaded
commercial properties?
A. There are very few commercial properties in Collier County with homestead
exemptions. These properties will be handled the same as multifamily properties.
The portion of the property used for the homestead will be limited by the "Three
Percent Cap" and the rest of the commercial property will not be capped.
15. Q. Two brothers buy a parcel with one residence. One brother lives in the
house and has a homestead exemption and the other brother does not have a
homestead. How does the "Three Percent Cap" affect this parcel?
A. The market value of the parcel must be split and the portion of the homestead
must be capped while the remainder of the assessment adjusts with the market
value.
16. Q. What happens with new additions and renovations?
A. The value contribution of the new addition is added to the capped assessed
value and this is the new base value. Renovations, remodeling, etc. create
unique problems and must be handled on a case by case basis. Generally, changes
to the structural elements and sub areas may result in new construction that
will be added to the prior capped assessed value.
For questions, comments or more information please call or visit our offices to
speak with one of our customer service representatives.