This one has come up twice recently. A husband and wife buy a property and homestead it. Some years later they have accumulated a savings on their tax bill and decide to get divorced. This decision will necessitate that the title to the property be taken out of the joint name, perhaps sold to a third party, or perhaps the husband, or the wife, is going to retain the house in the settlement.
Who gets the benefit of that accumulated tax shelter? The ability to transfer it into one party or the other now, or to “port” (the accumulated savings is portable) it into a new homesteaded property.
Remember, you MUST re-apply for the homestead exemption in ANY transfer of the property ownership. If your spouse transfers the property to you, you must re-apply. If your spouse moves out, buys a new property and applies for a homestead exemption, you must re apply. You should get a card right after the start of the year stating that you have a homestead exemption in place. If you did not get this then re-apply.
Don’t overlook the value of this. Let’s pick some reasonable numbers. It would not be out of the question to have $200,000 in tax portability savings. This would be the difference between what the property is appraised for and what it is assessed for. So the appraised value of the property is $500,000 and the assessed tax value is $300,000. Note that I did not deduct the $50,000 from this. With the average millage rate being about 2% this saves the couple 2% of $200,000 ($500,000-$300,000) or $4,000 every single year.
Now if one of the couples is renting for the next few (2+) years or moving out of state they should assign this benefit to the other party. If both parties intend to stay here in Florida and buy another property then perhaps it should be split equally between the two parties. And you have 2 years to port this saving into a new property. So, if one were to apply for a homestead exemption in 2023 (apply by March 1st 2023 for the bill you will receive in November 2018) then you must have had a homestead exemption in place for 2020 or later.
