At RealTrade, we are committed to equipping real estate professionals with the knowledge and tools they need to excel in their careers. Knowing basic concepts of homestead portability, property taxes, and hidden protections can tremendously benefit homeowners and help you, the agent, become a go-to expert in your community. By mastering these topics, you will become an indispensable resource, helping your clients make informed decisions and achieve successful transactions.
What is homestead and what potential does it bring to homeowners? A homestead refers to a property that serves as the primary residence for the homeowner and their family. It offers legal protections and benefits that vary by jurisdiction. These advantages can include shielding from judgment creditors, a deduction from the property's value, and a cap on the increase in taxable value under the Save Our Homes Constitutional Amendment.
To qualify for homestead, the homeowner must establish the property as their primary residence on January 1st and apply before the specified deadline, often around March 1st. Establishing primary residency can be supported by various documents, such as a valid state driver's license, evidence of relinquishing an out-of-state license, voter registration, proof of address on tax returns, declaration of domicile, and more. Citizenship or permanent residency is required, and additional factors like employment location, children's school address, and address on financial statements can contribute to demonstrating residency.
It is crucial to understand that only one primary home is allowed per owner, meaning homeowners cannot claim primary residences in multiple states simultaneously. Additional exemptions may be available for seniors aged 65 and above, disabled veterans, and surviving spouses, further reducing the taxable value of the property.
It is essential to dispel the misconception that the purchase price of a property is equivalent to its taxable value. Appraisers typically consider 85% of the purchase price to exclude taxes on closing costs. The market value is determined based on the property's average condition in an arms-length transaction, assessed as of December 31st of the application year.
RealTrade takes pride in unveiling the fascinating concept of homestead portability, a feature that allows homeowners to transfer a portion of their accrued property tax savings from one property to another within the same jurisdiction. Portability, established as part of the Save Our Homes Constitutional Amendment, can be applied for at any time and does not expire. Homeowners have up to three years to collect the portability benefit after selling a property if they do not file for a new homestead. The portability application process involves filing Form DR-501T.
It is crucial to note that specific eligibility criteria and limitations exist for homestead portability, including timing constraints, restrictions on the value or location of the new property, and filing requirements. Understanding these rules and guidelines in your jurisdiction is paramount to assisting homeowners seeking homestead portability.
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