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) whichever is less..

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.

Q: Who qualifies?

A: You must have a property with a homestead exemption.

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 and is separate from how a capped assessed value is calculated each year. tax amounts.

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. Market Value - is fair market or just value as determined by the property appraiser pursuant to Florida State Statute.

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, 2023 and file for homestead exemption in January or February 2024. The base year is 2024, the year you received the homestead exemption. The base value is the property assessment as determined by the property appraiser for the 2024 Tax Roll.

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 as of January 1 of the following tax year 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.

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 Homestead)

Q: If the homestead assessment goes down will this lower the base value?

A: Possibly. Remember, the 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. For example, 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.

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: Possibly, as in question 9 above, the 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. For example, 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.

Q: What happens with the "Three Percent Cap" when a property owner combines adjacent properties or, the opposite case where a property is divided or made smaller?

A: Combinations and Splits and cutouts are processed in the following manner.

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.

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.

Q: What happens if I combine my vacant lot with my home?

A: 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.

Q: How does the "Three Percent Cap" affect properties like duplexes?

A: 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 1/2 of a duplex. The 1/2 of the assessment with the homestead is subject to the "Three Percent Cap". The 1/2 of the assessment without the homestead is not subject to the cap.

Q: How will the "Three Percent Cap" affect 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 be capped by the 10% cap.

Q: How does the "Three Percent Cap" affect split ownership?

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 if it is owned as tenant in common. If the property is owned as joint tenants with rights of survivorship, then the full value will be capped.

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 at 239-252-8141.