Which home to apply for homestead exemption?
 

I have a home with I bought in 1996 and it's currently assessed at about
250K but the market value should be around 400K. Florida has this SOH (Save
Our Home) rule that prohibits a home from raising more than 3% a year in
assessed value. Earlier this year I bought another home at 450K so I know
next year it will be taxed at 450K. Both homes are in south Florida one in
Broward County and one in Miami-Dade.

I am remodeling the new home now and it will be another six months before it
will be ready to move in. Then I will plan to sell the current home but
with the current market trend it may be hard to sell.

My question is should I keep the current home for homestead exemption now
even though the new home will be taxed at it's full sale price because if I
apply for Homestead for the new home, the existing home tax will suddenly
jump to 400K? So it is better to not change my current exemption until I
sold the current home? Do I have my logic right?

Thanks,

MC

Which home to apply for homestead exemption?
 

"miamicuse" wrote in
:

I have a home with I bought in 1996 and it's currently assessed at
about 250K but the market value should be around 400K. Florida has
this SOH (Save Our Home) rule that prohibits a home from raising more
than 3% a year in assessed value. Earlier this year I bought another
home at 450K so I know next year it will be taxed at 450K. Both homes
are in south Florida one in Broward County and one in Miami-Dade.

I am remodeling the new home now and it will be another six months
before it will be ready to move in. Then I will plan to sell the
current home but with the current market trend it may be hard to sell.

My question is should I keep the current home for homestead exemption
now even though the new home will be taxed at it's full sale price
because if I apply for Homestead for the new home, the existing home
tax will suddenly jump to 400K? So it is better to not change my
current exemption until I sold the current home? Do I have my logic
right?

Thanks,

MC




Why are you asking tax related stuff in a repair NG? Why not a tax NG?

And don't you think for that kind of impact it might be better to ask
your tax advisor? It's not like you can't afford it.

Which home to apply for homestead exemption?
 

miamicuse wrote:
I have a home with I bought in 1996 and it's currently assessed at about
250K but the market value should be around 400K. Florida has this SOH (Save
Our Home) rule that prohibits a home from raising more than 3% a year in
assessed value. Earlier this year I bought another home at 450K so I know
next year it will be taxed at 450K. Both homes are in south Florida one in
Broward County and one in Miami-Dade.

I am remodeling the new home now and it will be another six months before it
will be ready to move in. Then I will plan to sell the current home but
with the current market trend it may be hard to sell.

My question is should I keep the current home for homestead exemption now
even though the new home will be taxed at it's full sale price because if I
apply for Homestead for the new home, the existing home tax will suddenly
jump to 400K? So it is better to not change my current exemption until I
sold the current home? Do I have my logic right?

Thanks,

MC


Do the math, check with your financial advisor. $25,000 exemption would
mean the second home would be taxed at $425K, right? The first home
won't lose the SOH limit until you sell it, right?

Which home to apply for homestead exemption?
 

miamicuse writes:

Do I have my logic right?

Maybe. It depends. Think of the reduced exemption as an asset that you
will lose if you switch homesteads. You say the assessment is reduced
about 150K, and you pay about 2 pct/year in property taxes, so this
asset generates about 3K/year to you in tax savings, which as a stream
of payments is like having an asset of perhaps 60K present value
yielding a 5 pct after-tax return. This asset tends to grow as the
inflation rate is consistently above the 3 pct cap.

Now you will lose that asset in a switch, but perhaps you are switching
to a more costly house, which the SOH savings will grow faster and
eventually outdo the loss on the switch. It depends on the relative
values of the two properties, the inflation rate, the housing market,
and on how long you keep your properties.

Also depends on future changes to the law, which you can't exactly
predict. They're talking about portability of the SOH valuation now.

The SOH is a wacky thing. It is essentially an asset that you gain from
seniority and staying put, and lose by moving. Or dying, so you can
think of it as a punitive death tax!

Which home to apply for homestead exemption?
 

If you don't change residences you will be paying tax on $225K ($250K -
$25K) and $450K values -- ie, taxes on $675K values. If you move your
homestead exemption you will be paying taxes on values of $400K and $425K
($450K-$25K) -- ie, $825K values. Your decision hinges on the changes in
value you expect for the new house between now and the time you sell the old
one -- the time when your new home value is constrained by the SOH law.
Since the current Florida housing market is almost flat, it looks to me like
your least expensive choice is to keep the homestead on the old house and
enjoy its 10 years of SOH protection. Two other factors which may affect
your calculation is any tax rate differences between the two locations, and
the ratio between assessed valuation for tax purposes and possible sales
prices, but from what you've said I don't think these will change the
outcome of the calculations.

"miamicuse" wrote in message
...
I have a home with I bought in 1996 and it's currently assessed at about
250K but the market value should be around 400K. Florida has this SOH
(Save
Our Home) rule that prohibits a home from raising more than 3% a year in
assessed value. Earlier this year I bought another home at 450K so I know
next year it will be taxed at 450K. Both homes are in south Florida one
in
Broward County and one in Miami-Dade.

I am remodeling the new home now and it will be another six months before
it
will be ready to move in. Then I will plan to sell the current home but
with the current market trend it may be hard to sell.

My question is should I keep the current home for homestead exemption now
even though the new home will be taxed at it's full sale price because if
I
apply for Homestead for the new home, the existing home tax will suddenly
jump to 400K? So it is better to not change my current exemption until I
sold the current home? Do I have my logic right?

Thanks,

MC

Which home to apply for homestead exemption?
 

"miamicuse" wrote in message
...
I have a home with I bought in 1996 and it's currently assessed at about
250K but the market value should be around 400K. Florida has this SOH
(Save
Our Home) rule that prohibits a home from raising more than 3% a year in
assessed value. Earlier this year I bought another home at 450K so I know
next year it will be taxed at 450K. Both homes are in south Florida one
in
Broward County and one in Miami-Dade.

I am remodeling the new home now and it will be another six months before
it
will be ready to move in. Then I will plan to sell the current home but
with the current market trend it may be hard to sell.

My question is should I keep the current home for homestead exemption now
even though the new home will be taxed at it's full sale price because if
I
apply for Homestead for the new home, the existing home tax will suddenly
jump to 400K? So it is better to not change my current exemption until I
sold the current home? Do I have my logic right?

Thanks,

MC

Of course there is the legal requirement that the house must be your
residence on Jan 1 of the year.
Where are you registered to vote? Where is your mail delivered? What is the
address on your driver's license and auto registration? The state doesn't
care about he financial ramifications.

Charlie

Which home to apply for homestead exemption?
 

Charlie Bress wrote:

"miamicuse" wrote in message
...

I have a home with I bought in 1996 and it's currently assessed at about
250K but the market value should be around 400K. Florida has this SOH
(Save
Our Home) rule that prohibits a home from raising more than 3% a year in
assessed value. Earlier this year I bought another home at 450K so I know
next year it will be taxed at 450K. Both homes are in south Florida one
in
Broward County and one in Miami-Dade.

I am remodeling the new home now and it will be another six months before
it
will be ready to move in. Then I will plan to sell the current home but
with the current market trend it may be hard to sell.

My question is should I keep the current home for homestead exemption now
even though the new home will be taxed at it's full sale price because if
I
apply for Homestead for the new home, the existing home tax will suddenly
jump to 400K? So it is better to not change my current exemption until I
sold the current home? Do I have my logic right?

Thanks,

MC


Of course there is the legal requirement that the house must be your
residence on Jan 1 of the year.
Where are you registered to vote? Where is your mail delivered? What is the
address on your driver's license and auto registration? The state doesn't
care about he financial ramifications.

Charlie


Florida doesn't enforce legal residency much, but a change in voter
registration (at least where I lived) will kick out the disagreeing
homestead exemption quickly. Also, if the home has another owner who
doesn't qualify (like a parent or child out of state), the residing
owner only gets their own portion of the homestead ex.