It’s a new year, and that means that you need to start thinking about doing your 2020 tax return. It has been a tough year economically all around, so any help with regard to deductions, credits, and exemptions are more than welcome. Well, there is one very powerful tool available to you that can reduce your tax burden if you are eligible – Florida’s homestead exemption.
Accordingly, in this article, we are going to answer the most frequently asked questions we get about Florida’s homestead exemption. If, after reading this article, you want to learn more about the homestead exemption in Palm Beach, FL, then we welcome you to give us a call at Doane & Doane, PA.
At Doane & Doane, PA, we are passionate about giving our clients the personalized legal counsel they need to appropriately take care of many major life and death decisions, such as tax planning. So, to answer your questions about the homestead exemption in Palm Beach after you read this article, we welcome you to consider contacting us at Doane & Doane, PA for tax planning advice and services. You can contact us today at 561-656-0200 or fill out our online contact form.
First, the Florida Homestead Exemption Explained
The State of Florida provides a homestead exemption that can reduce the taxable value of your home by up to $50,000. It is based on the assessed value of your house and comes with certain parameters.
Here is how it works. For the first $50,000 of the value of your home, half of that or $25,000 is exempt from all property taxes (including school taxes). Then you pay full taxes for any value of the home between $25,000 and $50,000.
If your home is assessed at more than $50,000, then for any value between $50,000 and $75,000, you are eligible for another $25,000 exemption, but this exemption does not apply to school taxes. Finally, for any value above $75,000, you will pay full taxes.
The best way to understand the homestead exemption is through examples. Let’s take a look at three examples with different home values:
1. For a $49,000 home, the first $25,000 is exempt from all property taxes. The remaining $24,000 is taxed normally.
2. For a $69,000 home, the first $25,000 is exempt from all property taxes, the next $25,000 is taxed normally, and the remaining $19,000 is exempt from all property taxes except school taxes.
3. For an $89,000 home, the first $25,000 is exempt from all property taxes; the next $25,000 is taxed normally; then the next $25,000 is exempt from all property taxes except school taxes; and finally, the remaining $14,000 would be taxed normally.
Are You Eligible for the Homestead Exemption?
There are three requirements for you to be eligible to take advantage of Florida’s homestead exemption:
1. Permanent Residence. The property for which you want to claim the exemption must be your permanent residence or the permanent residence of someone you claim as a dependent on your tax return.
2. Live on the First of the Year. You have to live at the property on the first of the year. So, to claim the exemption on your 2020 tax return, you would have to have lived at the property on January 1, 2020.
3. Not Rented more than 30 Days. You cannot have rented the property for longer than 30 days.
To confirm that you meet all of those requirements, you should consult with an experienced tax planning and estate planning attorney.
How Do You Obtain the Exemption?
Remember, this tax exemption applies to your Florida state taxes, not your Federal taxes. To receive the exemption on your Florida tax return, you need to fill out an application and prove your residence. All your paperwork needs to be filed by March 1 of the tax year for which you want to claim the exemption. So, to take advantage of the exemption on your 2020 tax return, you would have had to file the application and proof by March 1, 2020.
If you did not do that, then it’s good to take care of that now, for the tax year 2021. File your exemption paperwork before March 1, 2021, so you can take advantage of this great tax benefit when you file your 2021 taxes.
The good news is, once you apply, you do not need to reapply every year. The exemption is automatically renewed every year unless you notify the state that you no longer are eligible. It is important to notify the state if you are no longer eligible because there could be financial penalties if you fail to inform the state of your ineligibility.
In sum, the homestead exemption in Florida is a great way to save money, but you should consult a professional to make sure that you do what is necessary to enjoy the benefit.
Look to Doane & Doane for Help Enjoy the Homestead Exemption in Palm Beach, or throughout Florida.
Founded in 2003 by husband and wife legal team, Randell C. Doane and Rebecca G. Doane, Doane & Doane provides legal and financial services to families, individuals, and businesses throughout Southeast Florida.
There are few guarantees in life. But as long as you are alive, you have to pay taxes in one form or the other. As a resident of Palm Beach, Florida, you need not worry and lose sleep over managing your tax obligations. Doane & Doane, with its experienced tax planning lawyers, can assist you and your company in managing and handling your tax obligations with astute planning.
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Tax and estate planning are about much more than just paying taxes and giving away property. It is an act of love and kindness, with the ultimate goal of providing for the future financial security of your loved one. At Doane & Doane, our Wills and Trusts Attorneys West Palm Beach help people plan for retirement, make provisions for loved ones, figure out future child support, and minimize tax liability. Experienced wills and trusts attorneys know which tools to use to get the best results for their clients. Our lawyers can help you determine which tools are best suited to your specific circumstances.
Call us at Doane & Doane, P.A. to help you if you are faced with a probate matter, or if you would like estate planning services in Florida. You can reach us at 561-656-0200. Call us today.