• Home
  • Buyers
  • Palm Beach Property Taxes With Brian Mudd

How to file for Homestead Exemption

Go to PBCGOV.com/papa

Palm Beach Property Taxes

Homestead Exemption is a benefit that has long term benefits for Palm Beach County homeowners. Understanding the Palm Beach County's exemption, portability and who qualifies is important to anyone considering a home in Florida. 

One of the things that I think that people don't understand is they look at the taxes of a home that they're buying, what it is right now. But they're forgetting to look at what it most likely will be when they purchase it in a year. We have had people that didn't use us to buy a property call us a year or two later being forced to sell their home because they could not afford their property taxes. For example, they buy new construction. There are almost no taxes, right? It's very affordable on vacant land. 

Buyers often do not know the questions to ask. I think it's important to give great information that people understand how to read the tax information that's available. The website is excellent. And there's a great amount of information. You can read about portability, which is another huge gift. We always remind our people moving especially out of palm beach county to take their portability with them if they have it. Because a lot of times, people don't realize that it's not about Palm Beach County. Anywhere that they move in Florida, they can take that portability with them. I just think that people want to make good decisions, they just need to have the right information.  Palm Beach County's property appraiser, Dorothy Jacks joining us now. I appreciate you taking the time with us on today's show. And first, just to give us an overview of the typical proposed assessment that people recently received in the mail.

The proposed tax notices go out in mid-August every year. And it's meant to really share three different things with you. One is what your taxes will probably be this year. Two, what the market value is of your property. You have an opportunity, if you wish, to petition the value, in other words, protest the value, that it's higher than you were expecting or that it should be. And third, also just to let you know what benefits your receiving, whether that's the homestead exemption, or portability benefit, or any of the cap benefits that are available. It's a great notice to take a look at the whole thing, but those are the three primary parts of it.

Now, when it comes to the overall assessment itself, the timing of what people are looking at, that often is something that is confused. This isn't the real-time assessment of one's value. We're taking a look at something that happened previously.

Florida law requires that we value every property as of January 1st of that year. Even though we're now in late August, and that's when we mailed the notices, which is also set by law, we are looking at, "What was the value?" What we were trying to hit as the value around January 1st. And what that really means is it's based on market data from 2017. It's even older than the eight months you hear about. It's actually based on, "What did the market tell us during the entirety of 2017?" Let's look at that, and then let's come to what we feel the value of your home is worth on January 1st, 2018, and then you get that notice in August. We are behind if you will. We're not the best source for current market information. The best source are real estate professions because they certainly know a lot more about the current market than our office does because of this requirement that we look at January 1st as the tax date.

That's so diverse in the real estate. And it's hard to say what the average assessment was. But overall, if we took the entire tax roll and bundled it together, we saw about a 6% increase in value for the entire county. Now, that takes into account commercial property, vacant land, industrial property, et cetera. But for most homeowners, especially if you're in a neighborhood that's popular, and steady, and in a good location, you probably saw an increase in your market value this year.

What is the Homestead Exemption

Homestead exemption has been around a long time and is probably the easiest thing to explain. It's a benefit for people who make Florida their primary home. You can own multiple homes, but you have to declare one of them as your primary residence. You have your driver's license in Florida, you register your cars in Florida, you vote from Florida, and you probably file your taxes from Florida. And that defines you then as a Florida resident. Once you hit that status, you can apply for this nice property tax benefit called "homestead."

Benefits of the Homestead Exemption

Homestead is actually a $25,000 reduction in your market value first, then it's the second $25,000 reduction if your value is between 50 and 75,000 for a total of about $800 in savings. There's a third homestead proposed on this year's ballet, and I can tell you a little bit more about that. But once you have the homestead designation, once you're a homesteader, you begin to accumulate a cap on the amount that your property increases year over year. It's called the 4% cap, although it's not always 3%. The law says 3% or the change in the CPI, whichever is less. This year, it's actually 2%. Values this year, if you are homesteaded, only went up 2%, which causes us to only actually see a 2% increase in our ad valorem tax, the tax based on value.

Save the Homes or Cap Benefit

Now, over the years as you stay in your home, your market value continues to rise. One of the duties of our office is to keep track of that market value. But your capped value based on that cap increment is staying lower. The difference between those two numbers, between market and capped, or what's called on our website, assessed, is your portability benefit, your potential benefit. Portability, which was introduced in 2008 by the voters who approved it, allows you to actually port that benefit, that difference between market and capped to another homesteaded property anywhere in Florida

There's a lot of rules around portability. If you are going from a lower value to a higher value, you can take your whole portability benefit. If you're downsizing in your property, say moving to a condo, you can only take the proportionate benefit as a relationship of the old value to the new value. What I mean by that is, say your new home is only worth 75% of your old home. You only get 75% of the port differential to take with you. You have to do this within two tax roll cycles, which is often somewhere where people get caught up. And you only have a maximum of half a million dollars you can port. Some people, believe it or not, have more than that, but it maxes out at 500,000. 

How Value Impacts Taxes

Absolutely. And that's the beauty of the proposed tax notice that everyone just received. And the top half of that form, it really goes into detail of the taxing authorities that you are paying. Your tax bill isn't just a simple $2,000 bill. It's actually made up of usually somewhere between 10 and 15 parts. And each of those are distinct taxes paid to distinct authorities, whether that's a city. If you live in a city, the county, the county fire rescue, there's a library district, there's a health care district, there's a fined district, which is Florida inland navigation district that manages the Intracostal Waterway. There are all kinds of districts, and each of them are outlined on that notice. And the beauty of that is you can call each one of them or go to their public meeting. A part of the notice is disclosing when their public meeting will be held. You can go and say, "Hey, your rate went up a lot this year. Why is that? What additional service am I going to get because your rate went up?"

It's important to mention too, also on the notice, ad valorem taxes. These are taxes not based on value, probably the most well-known one, solid waste authority. Garbage assessment is not about the value of your home. It's really about, "How many times does the truck have to come by your house, lift your garbage, and then take it out to the dump?" It's really based on a unit tax. My home, which might be bigger than your home, will pay the same simply because it cost the same for the truck to come by and pick up those cans, that my house is your house. That second half of the notice is becoming much more interesting. These days, you see a lot more taxes moving onto that second part because a lot of governments, including cities, are using that as a way to bring in revenue that's not so much based on value and try to, in many ways, make it a little more fairer in that the tax is based again on a use as opposed to, "Because your home is worth more than my home, you pay more."

I always, again, recommend people, really look at that section. The phone numbers are there. If you don't know what that district is doing, call them and say, "Can you just tell me what this money is for?" And if it's gone up a lot over last year, it tells you what last year's tax is. Call them and say, "Why has it gone up? What are we paying for?" There are some very, very legitimate reasons. I don't want to in any way imply that it's not for good reasons. For instance, a Loxahatchee Groves voted to assess themselves to improve their roads. They had a lot of washout this year in the big storms. And they have just decided to self-assess so that they could bring in the revenue to improve their roads. residences are seeing a higher tax because of that. There's good reason, it's just becoming informed about the reasons.

What Happens when the Home Sells?

All those benefits, homestead and portability, go away when the person who was receiving them sells. It's sort of like the sad honeymoon. You get the benefit for the remainder of the year, again, all taxes based on January 1st, so exemptions are also based on January 1st. If the seller was in that home on January 1st, didn't sell until July, then that seller's benefits are actually going to stay on that house the entire rest of that year. And buyer is going to get the honeymoon for the six months where they're going to have the seller's benefits. However, end of the year comes, all bets are off. Seller's benefits go away with the seller and buyer is sort of fresh.

It's as if they've come right into the market at market value on that property, and they're going to pay tax on that market value. Now, this buyer may come in and homestead, which is fantastic. That's what we want them to do as soon as they buy. However, they don't get the cap benefits of the prior owner. They start again from scratch. Market value minus exemption equals tax. We really encourage people to use our website.

How to file for Homestead Exemption

Go to PBCGOV.com/papa

Budgeting for your Taxes

Use the tax estimator on the property level. And it will tell you. It allows you to put in what you're going to but the property for, and it'll tell you what the taxes could be. You can put the money aside in savings so that you could help yourself later on down the road when the taxes do hit. You can also call us. We can tell you about what the taxes will be. Anybody you speak to can tell you that in our office. And we're happy to do it because it's the scariest thing. And I can't tell you how many people call us, and we feel so awful, crying because they thought their taxes were going to be 2,000, and then their taxes are 6,000. And it's a shock. We want to try and help as much as we can. But about the proposed tax notice, this is an important time. There are 25 days from the day we mail the notices for you to file a petition protesting the value of your property. Now, it ends September 14th this year. That's the end. It's important. It's a fast, approaching window. But what you want to do is if you disagree with the market value, call us. Call our office. The phone number's on the form. And just talk to an appraiser about your value. And sometimes you tell us something we didn't know. I mean, we're valuing 635,000 properties a year. There are little detailed we may not know.

What if there are Mistakes

We have no drones in the sky. But often people call us and tell us something we were unaware of, and then we're able to adjust their value. However, if we can't come to a happy conclusion, we always say, "File a petition." And that's a very simple process. $15.00 filing fee filed with the clerk of the court. It's not with us. We are not in charge of the process. The value adjustment board is in charge, a separate entity. We end up being simply one side, basically an arbitration between the taxpayer and our office. And that hearing occurs later on, and you come in, provide market data that you've collected at a magistrate completely unrelated to us listens to you, listens to us, and then makes a determination. Palm Beach Property Taxes Made Easy Palm Beach ... (Completed 09/05/18) Transcript by Rev.com Page 9 of 10

And that determination is binding on our office. We can't just say later on, "Oh, we didn't like that." And go back to where we were. It's binding on us. It's a good process if you really feel that our market value isn't appropriate. And I will mention that again that it's market value you have to petition, not capped value because of course cap is completely run by those caps, and it's not a determination of value.