The Homestead Exemption & Taxes
Once you establish your Florida residency you can take full advantage of Florida’s sunny tax climate and advantageous asset protection laws. Florida residents do not pay state income tax and there is no state estate tax. Florida homestead law also provides real estate tax breaks, capped rate increases in tax assessed values, the portability of capped tax assessments, and even protection from creditors.
Establishing Florida Residency & Homestead Exemption
- Florida Homestead Exemption
Once you have established Florida as your domicile, or primary residence, now is the time to consider the Florida Homestead Exemption and the great benefits it offers to Florida residents. If you are new to Florida, or are unsure what this means, Florida state law allows Florida homeowners to claim up to a $50,000 tax exemption on their primary residence (additional exemptions might also be available). This benefit equals savings on the homeowner’s annual property tax bill and applicability to port savings from an existing homestead to a new homestead property in the future, for potential additional savings.
First and foremost, to be entitled to receive Florida Homestead Tax Exemption benefits, the following two deadlines must be met:
- Must be a Florida resident and own/occupy the property as your permanent residence on or before January 1st of the year in which you wish to claim homestead exemption; and
- The Florida Homestead application must be received by the local Property Appraiser’s office by March 1st.
Applications for the Florida Homestead Exemption can be found at your local Property Appraiser office or on their website. For our local readers, the following link will direct you to the Sarasota County Property Appraiser’s online homestead exemption application: https://www.sc-pa.com/exemptions/homestead/apply-online/, and the following link will direct you to the Manatee County Property Appraiser’s online homestead exemption application:
https://ofa.manateepao.com/ApplyOnline/WebForm1.aspx.
Florida residents receive tremendous tax benefits through the Florida Homestead Property Tax Exemption. For example, Florida property owners who qualify to receive a Homestead Exemption are eligible to receive a total exemption of up to $50,000.00. In addition to the above tax benefit, the “Save Our Homes” provision of the Florida Homestead Exemption caps the annual increase of the assessed value of homesteaded property beginning in the year the property owner qualifies and receives the homestead exemption.
The annual increase thereafter will be the lesser of three percent or the change in the consumer price index for the previous year for so long as the property owner maintains their Florida Homestead. So what happens if you move after you have established your Florida Homestead? Well, when an existing Florida homeowner establishes a new Florida homestead, they are entitled to “port” up to $500,000.00 of their “Save Our Homes” tax benefits to their new Florida homestead as long as they establish their new homestead within two years of leaving their prior Florida homestead property. For more information on Florida’s Homestead exemption, please read our blog https://berlinpatten.com/florida-homestead-exemption-save-homes-portability/.
Sarasota County Property Appraiser
2001 Adams Lane, Sarasota
(941) 861-8200
www.sc-pa.com
Manatee County Property Appraiser
915 4th Avenue West, Bradenton
(941) 748-8208
www.manateepao.com
- Obtaining Your Florida Driver’s License or Identification Card
Florida requires that you update your address information on your driver’s license within 30 days of moving to your new address. You will be required to produce many original documents so it is best to be prepared and know which documents will be required before making the trip to the local DMV. You can access all of this information at flhsmv.gov or visit the Sarasota County Tax Collector’s website http://www.sarasotataxcollector.com/services/motorist-services/drivers-license/document-requirements
- Register to Vote
Once you receive your Florida Driver’s License you may register to vote. You can obtain a voter registration form online through the local supervisor of elections.
Sarasota County Supervisor of Elections
101 South Washington Blvd., Sarasota
(941) 861-8600
www.sarasotavotes.com
Manatee Supervisor of Elections
600 301 Boulevard West, Suite 108, Bradenton
(941) 741-3823
www.votemanatee.com
- Register Your Vehicle in Florida
The State of Florida requires a Florida license plate within 10 days of residency. For a list of required documents, please visit www.flhsmv.gov . Don’t forget to update your auto insurance!
Sarasota County
101 South Washington Blvd., Sarasota (941) 861-8300
Manatee County
819 301 Boulevard West, Bradenton (941) 741-4800
Download our printable quick reference relocation information sheets for important phone numbers.
https://berlinpatten.com/wp-content/uploads/2017/12/manatee-county-relocation-notes.pdf
Local School Districts
Sarasota County Schools
1960 Landings Blvd., Sarasota
(941) 927-9000
www.sarasotacountyschools.net
Manatee County Schools
215 Manatee Ave. West, Bradenton
(941) 708-8770
www.manateeschools.net
Florida Tax Climate
- Sales & Use Tax
Florida’s sales tax is 6%, however each county is able to impose an additional sales tax. Sarasota County levies an additional 1% sales tax totaling 7% and Manatee County levies an additional .5% totaling a 6.5% sales tax. Sales and use tax is also applied to tangible property and leases under 6 months, as well as commercial rent. No sales tax is owed on residential leases over 6 months in term. Florida is the only state in the United States to impose a sales tax on rents. Currently, the tax is imposed at the rate of 6 percent in every county except Miami-Dade, which fixes the rate at 7 percent.
The tax imposed on commercial property leases is not limited to the base rent; sales tax is also imposed and calculated on any additional rent, including a tenant’s share of common area maintenance (CAM) charges, real property taxes, insurance, and just about all other charges or consideration required or paid by a tenant under the terms of a lease. The good news is that on May 25, 2017 Governor Rick Scott signed House Bill 7109, which beginning January 1, 2018 reduces the general state-level tax on rents (sometimes commonly referred to as the business rent tax), from 6 percent to 5.8 percent (a 3.33% reduction). This reduction applies to rent payments due and payable for occupancy periods beginning January 1, 2018. Rent payments tendered prior to January 1, 2018 (for occupancy periods after January 1, 2018), will be subject to the reduced 5.8% state sales tax (plus any applicable discretionary sales surtax).
- Real Property Tax
In Florida, property taxes are assessed and collected on all real property and tangible personal property located within the county. The real estate tax bill is a combination of ad valorem taxes and non-ad valorem assessments. The tangible personal property tax bill is exclusively an ad valorem tax. Taxes are due and payable on November 1st of each year, with discounts provided for early payment. Florida homeowners can claim up to $50,000 in property tax exemptions through Florida Homestead on their primary residence. In cases where a property owner pays real estate taxes through an escrow account, the owner’s mortgage lender or servicer typically requests a copy of the tax bill from the County Tax Collector. The lender or servicer will receive a copy of the tax bill and the owner will receive a copy of the notice. Mortgage lenders and servicers are required to pay the tax bill prior to expiration of the 4% discount period.
The following discounts apply for early payment:
- 4% discount if paid in November
- 3% discount if paid in December
- 2% discount if paid in January
- 1% discount if paid in February
- The gross amount is due by March 31st
- Tourist Development Tax
The Tourist Development tax, also known as “bed tax”, is a 5% tax imposed on the revenue generated from property rentals of 6 months or less. This bed tax is in addition to the Florida sales tax (Sarasota County 7% sales tax; Manatee County 6.5% sales tax).
- Estate Tax
Florida residents do not pay estate or in heritance taxes. We strongly recommend new residents have their estate plan reviewed not only to determine whether the documents will be valid under Florida law, but also to determine whether the estate plan still achieves the desired results for the client and whether there are any state related issues.
- Income Tax
Florida residents do not pay state income tax.
- Corporate Business Tax
The Florida Corporate Income Tax rate is 5.5% and is assessed against entities that conduct business or earn or receive income in Florida, including out-of-state corporations. Even if there is no income, a Florida corporate income tax return may still have to be filed. Some entities are exempt from filing (generally pass through entities such as sole proprietorships or disregarded LLCs, estates and trusts and entities taxed under Subchapter S of the Internal Revenue Code). A CPA or tax advisor should be consulted about an entity’s tax situation and whether a conversion or reorganization might be advantageous.
- Documentary Stamp Tax
Documentary stamp tax is levied on documents as provided under Chapter 201, Florida Statutes. Documents subject to the tax include, but are not limited to: Deeds, Bonds, Notes and written obligations to pay money, Mortgages, liens, and other evidences of indebtedness. The tax rate for documents that transfer an interest in real property is $.70 per $100 (or portion thereof) of the total consideration paid, or to be paid, for the transfer.
The tax rate on a written obligation to pay money is $.35 for each $100 (or portion thereof) of the obligation evidenced by the document. Tax is due on a document that contains a promise to pay a specific amount of money and is signed, executed, or delivered in Florida. For example, Demand notes, Term notes, Retail installment sale contracts, Leases with an unconditional promise to pay, Certain renewal notes, Title loans, Mortgages, Liens, and Other Evidences of Indebtedness.
- Intangible Tax
This tax must be paid before the Clerk can accept any mortgage for record, and applies only to mortgages, agreements or contracts for deed, deeds of trust or other liens pertaining to real property. Intangible taxes are not levied on unsecured loans with an unconditional promise to pay. The tax rate of $.20 per each $100 on the amount of the mortgage or the amount financed.
