Florida Save Our Homes, explained.

Save Our Homes is constitutional — built into the Florida Constitution (Art. VII §4(d)) by 1992 voter amendment and effective for the 1995 tax year. It does two things:

1. Caps the annual increase in assessed value on a homestead-elected primary residence at 3% per year (or the inflation rate, whichever is lower).
2. Creates portability — the accumulated cap discount can be carried to a new Florida property within 3 years of selling the original.

The economic effect: over a multi-year hold, the homesteaded primary residence’s assessed value compounds at 3%, while the real market value typically grows at 5%-8%+. The gap between assessed and market widens each year, and the taxable basis lags actual market by a meaningful margin.

This is structurally different from anything in the Northeast property tax system. NY State’s assessment process resets on sale and runs much closer to market. The FL framework rewards long-term holds in a way the NY framework specifically doesn’t.

The baseline

When you purchase a Florida property and elect homestead for the first time, the county appraiser sets your assessed value at just market value for the first year. From that point forward, assessed value can only increase by the lesser of 3% or the change in CPI — regardless of how much market value grows.

The compounding effect

On a $5M FL home appreciating 6% annually:

• Year 0: Market = $5.0M; Assessed = $5.0M
• Year 1: Market = $5.30M; Assessed = $5.15M (3% cap applied)
• Year 2: Market = $5.62M; Assessed = $5.30M
• Year 5: Market = $6.69M; Assessed = $5.80M
• Year 10: Market = $8.95M; Assessed = $6.72M

At year 10, the homesteaded property pays property tax on a $6.72M assessed value vs the $8.95M market — a $2.23M gap. At a typical Palm Beach effective rate of ~1.5%, that’s ~$33K of annual property tax savings, growing every year.

The 3% cap is per property, per homestead

The cap applies only to the homestead-elected property. A second home or investment property in Florida (without homestead) gets assessed at market value annually with no cap. There’s no equivalent for non-primary residence Florida ownership — the 3% cap is specifically a primary-residence benefit.

Separate from (but tied to) the 3% cap is the Homestead Exemption, which exempts up to $50,000 of assessed value from property tax at the homestead-elected primary residence.

The two layers

• First $25,000: exempt from all property taxes (county, city, school district, special districts)
• $25,000–$50,000: exempt from county and city taxes, but NOT from school district taxes

At a typical effective rate of 1.5% across all taxing authorities, the $50K exemption saves roughly $750/year in property tax. Not huge in absolute terms at HNW price points, but meaningful as a structural benefit.

Additional exemptions

Beyond the basic $50K, additional exemptions exist for specific shareholder profiles:

• Senior citizens (65+) with low income
• Veterans with disabilities
• Widow / widower
• Blind persons
• First responders with line-of-duty injury

These layer on top of the basic Homestead Exemption when applicable.

Since 2008, FL allows portability of the accumulated Save Our Homes discount to a new FL homestead property. If you’ve owned and homesteaded a FL property for several years and want to move within FL, you can transfer the accumulated SOH discount (up to certain limits) to your new property.

The 3-year window

You must establish homestead at the new property within 3 calendar years of giving up homestead at the prior property. The 3-year clock is critical — missing it means losing the accumulated discount.

The transfer limits

• Upsizing (new property more expensive than old): Transfer the full SOH discount, up to a $500,000 maximum.
• Downsizing (new property cheaper than old): Transfer a prorated portion of the discount, proportional to the new property’s value relative to the old.

Why this matters strategically

For HNW FL owners, portability is the cleanest way to move between FL homes (Palm Beach to Naples, Palm Beach to Miami, etc.) without losing accumulated property-tax benefit. Plan accordingly:

• Close on the new property within 3 years of selling the old
• File the portability application (Form DR-501T)
• Establish homestead at the new property by January 1 of the relevant tax year

Florida homestead status is determined as of January 1 of each tax year. To qualify for the current tax year, you must:

• Own the property as of January 1 (must have closed on the purchase)
• Make the property your permanent residence as of January 1
• File a Homestead Exemption application with the county property appraiser by March 1

The implication: buy before January 1 to capture homestead status for the current tax year. A December 28 closing locks in homestead for that year; a January 2 closing pushes it to next year.

What “permanent residence” means

FL takes a flexible view — you don’t have to be in residence on January 1 itself. What matters is whether your intent and behavior establish the property as your true permanent residence. The criteria:

• You file FL homestead application with the appraiser
• Your driver’s license is FL
• Your voter registration is FL
• Your vehicles are registered in FL
• You don’t claim homestead or primary residence in another state
• You file federal returns with the FL address as your primary
• You spend more time at the FL property than at any other residence

The application

Form DR-501. Filed annually (or automatically renewed at most FL counties once initially established). Required by March 1 for the current tax year; late filings can sometimes be accepted but the process is more complex.

The most common HNW mistake on FL homestead: claiming homestead in FL while continuing to treat NY as primary residence for other tax purposes. The two states’ tax systems don’t coordinate, but they DO share data through formal information-sharing agreements. A homestead claim that contradicts your NY residency posture can trigger:

• FL county homestead audit — counties actively audit homestead claims for accuracy
• NY State residency audit — if your FL homestead claim suggests you’re a NY non-resident, NY may audit aggressively
• Federal residency dispute — IRS may question which state should claim primary tax jurisdiction
• Tax-fraud exposure — claiming inconsistent residency positions for different jurisdictions creates federal and state fraud exposure

The right framing

FL homestead is appropriate ONLY when FL is genuinely your primary residence — meaning you spend the majority of your time in FL, your tax-residency posture is FL, your driver’s license is FL, etc. If you’re effectively still a NY resident with a FL second home, homestead is not appropriate and claiming it is risky.

For HNW clients in the dual-residence posture, the right answer is usually one of:

• Make the FL move comprehensive. Move primary residence, change tax posture, establish all the markers. Then homestead is appropriate.
• Keep NY as primary. Don’t claim FL homestead; the FL property is a second home subject to market-value assessment annually. Pay the higher annual property tax but avoid the audit risk.

The middle posture (claim homestead in FL while behaving as a NY primary resident) is the trap. Don’t go there.

FL counties take homestead audit seriously. The cap benefits accumulate to hundreds of thousands of dollars per property over multi-year holds, so the integrity of the homestead claim matters to the county’s tax base.

What counties cross-check

• NYS / state agency data sharing. FL has formal information-sharing agreements with many states. Your NY State driver’s license + voter registration are visible to FL counties.
• DMV records. FL DMV identifies vehicles registered to FL homestead addresses. Discrepancies (cars registered out of state) raise flags.
• Federal Form 1098 data. The mortgage interest deduction Form 1098 reports the property address; if you claim mortgage interest at the FL property but homestead at a different one, mismatch triggers review.
• USPS forwarding records. Counties have been known to use USPS forwarding-of-mail data to identify owners whose mail forwards to a non-FL address.
• Property usage patterns. Some counties check utility usage (electric, water) to see if the claimed homestead is actually being lived in.

What happens if you’re found ineligible

• Removal of homestead status (assessed value reset to market)
• Back-billing of property tax differential for prior years
• 50% penalty plus 15% interest on past-due amounts
• Potential fraud referral for egregious cases

The audit-resistant approach

For homestead to survive audit, the FL residency markers need to be unambiguous:

• FL driver’s license (NY license surrendered)
• FL voter registration (NY registration cancelled)
• FL vehicle registration (cars moved)
• FL primary CPA and primary brokerage relationship
• FL primary physician + dentist + veterinarian
• FL homestead application filed for relevant tax year
• No NY State resident return filed; non-resident return only if NY income exists

Example 1: $5M Palm Beach single-family, 10-year hold

Purchase price: $5,000,000 (homestead from year 1). Market appreciation: 6% annually. Palm Beach effective property tax rate: ~1.5%.

• Year 10 market value: $8,954,238
• Year 10 assessed value with SOH: $6,719,582
• Year 10 property tax with SOH: $100,794
• Year 10 property tax without SOH (assessed at market): $134,314
• Year 10 annual savings: $33,520
• Cumulative 10-year savings: ~$200,000

Example 2: $15M Miami Brickell condo, 10-year hold

Purchase price: $15,000,000 (homestead from year 1). Market appreciation: 5% annually. Miami-Dade effective property tax rate: ~1.8%.

• Year 10 market value: $24,433,422
• Year 10 assessed value with SOH: $20,158,747
• Year 10 property tax with SOH: $362,857
• Year 10 property tax without SOH: $439,802
• Year 10 annual savings: $76,945
• Cumulative 10-year savings: ~$465,000

The savings compound. Over a 20-year hold at a trophy price point, Save Our Homes can save $1M+ in property tax versus a non-homesteaded second home.