Amendment 5 On the 2020 Ballot
Amendment 5 to the Florida Constitution derives from Florida House Joint Resolution 369, which will be submitted to Florida voters for approval or rejection at our next general election on November 3, 2020. In order to pass, the Amendment will require a 60% supermajority vote of YES by Florida’s voters.
What is Amendment 5 and how does it work?
In order understand exactly what Amendment 5 is, a general explanation of the Save Our Home benefit is in order. The “Save Our Homes” benefit was created back in 1992, and it applies to homes receiving a homestead tax exemption. This benefit was designed to limit property valuation increases to the lesser of: (i) a maximum of 3% annually; or (ii) the Consumer Price Index (CPI). The public policy reason behind the passing of the Save Our Homes benefit was to prevent homeowners from being pushed out of their homes due to increased real property taxes in circumstances where the real estate market substantially increased in value.
An example of how the Save Our Homes benefit works is as follows:
Mary buys a house and files for a homestead tax exemption in 2018. The year that Mary files for the homestead tax exemption, the just value of the property is assessed at $100,000. In 2019, the property is reassessed, by the local Property Appraiser’s Office, at $200,000; however, since Mary has a homestead tax exemption, the Save Our Homes benefit dictates that Mary’s property valuation or taxable value reassessment cannot exceed the lesser of: (i) a maximum of 3%; or (ii) the Consumer Price Index for 2019, which was set at 1.9%. Here, since Mary’s reassessment is capped at the Consumer Price Index of 1.9%, the property valuation or taxable value is assessed at $101,900.
If a homeowner decides to sell their current homestead residence and to locate a new homestead in Florida, the homeowner may be able to transfer or to “port” all or a portion of the homeowner’s Save Our Homes benefit to the new homestead in Florida, which in turn can result in tax savings to the homeowner by lowering the tax assessment and the taxes for the new homestead. The only caveat to having the capability to transfer or to “port” all or a portion of the homeowner’s Save Our Homes benefit to a new homestead is that the homeowner must establish the new homestead by January 1 of the 2nd year subsequent to date that the homeowner sold his or her homestead. If the homeowner is unable to purchase a new homestead within this timeframe, the homeowner will lose the Save Our Homes benefit and will be subject to reassessment of their new homestead at just value.
In Mary’s circumstance, if she were to sell her home on April 2020, she would have until January 1, 2022 to transfer or “port” all or a portion of her Save Our Homes benefit to a new homestead. If she is unable to locate a new homestead before January 1, 2022, her Save Our Homes tax benefit would be lost, and the new homestead would be assessed at just value.
Amendment 4 proposes to extend the time for which the homeowner would need to locate and transfer or “port” all or a portion of a homeowner’s Save Our Homes benefit to January 1 of the 3rd year subsequent to the date that the homeowner sold his or her homestead. In Mary’s circumstance, if passed, Amendment 4 would serve to extend Mary’s time to locate and transfer or “port” all or a portion of her Save Our Homes benefit from January 1, 2022 to January 1, 2023.
Based on the foregoing, this would mean that Florida homestead owners could enjoy significant tax savings by having a longer timeframe available to transfer or “port” all or a portion of their Save Our Homes benefits. So much so that the Florida Revenue Estimating Conference (REC) has determined that, if approved, Amendment 4 would reduce local property taxes by $1.8 million, beginning in the fiscal year of 2021-2022, eventually growing to an annual reduction of $10.2 million.
If you have any questions about real estate law in Florida, contact the Orlando real estate attorneys at Nishad Khan P.L.
Section 5(e), Article XI, Florida Constitution.
Pedro J. Garcia, Miami-Dade Property Appraiser, https://www.miamidade.gov/pa/amendment_10.asp#:~:text=Amendment%2010%20is%20a%20benefit,lower%20(with%20some%20exceptions) (last visited Oct. 12, 2020).
Section 4(1), Article VII, Florida Constitution.
Florida Department of Revenue, Save Our Homes Assessment Limitation and Portability Transfer, Property Tax Oversight, at p. 1 (July 2018) (hereinafter, “Save Our Homes”), available at: https://floridarevenue.com/property/Documents/pt112.pdf.
Mike Twitty, Pinellas County Property Appraiser, https://www.pcpao.org/SOH.html (last visited Oct. 12, 2020).
Rick Singh, Orange County Property Appraiser, https://www.ocpafl.org/RP/SOH.aspx#:~:text=In%201992%20voters%20approved%20an,Save%20Our%20Homes%20(SOH).&text=This%20prevents%20owners%20from%20being,ownership%20changes%20or%20property%20improvements. (last visited Oct. 12. 2020).
Save Our Homes, supra note iv, at p.1.
House of Representatives, Staff Final Bill Analysis, Bill # HJR 369 Limitation on Homestead Assessments, at p.1 (Mar. 12, 2020).
Save Our Homes, supra note iv, at p.1.
Florida House Joint Resolution 369, at p. 4, 9 (2020).
House of Representatives, supra note viii, at p. 4.