In 2008, a constitutional amendment was passed stating that the assessed value on all non-homestead and non-residential real property shall not exceed ten (10%) from the prior year. The statutory language breaks this cap out into two categories called non-homestead real property and non-residential real property. This cap does not apply to the School Board portion of property taxes.
Non-homestead Residential real property is categorized as nine (9) or fewer dwelling units and residential vacant land. Any portions of this real property receiving a homestead exemption cannot also receive the 10% cap. More information about the assessment limitation in this category can be found in (F.S. 193.1554).
Non-residential real property is all other property that is not receiving assessment limitations for agricultural classification, conservation lands, inventory and livestock, homestead exemption and the non-homestead residential cap. More information about the assessment limitation in this category can be found in (F.S. 193.1555).
What is Non-Homestead & Non-Residential assessment limitation?
The Non-Homestead and Non-Residential assessment limitations limit the assessed value from increasing more than 10% each year, regardless of the market value increase. This cap does not apply to the School Board portion of property taxes.
Do you have to apply for the Non-Homestead or Non-Residential assessment limitation?
No. These assessment limitations are automatically applied to qualified properties.
Can all real property types benefit from the Non-Homestead and Non-Residential assessment limitation?
The Non-Homestead and Non-Residential assessment limitations applies automatically to all portions of real property not subject to the homestead exemption, agriculture classification, land used for conservation purposes, and tangible personal property.
When does the Non-Homestead and Non-Residential assessment limitations reset?
For Non-Homestead, the assessment limitation resets following a change in ownership or control except the following:
- The transfer of title is to correct an error.
- The transfer is between legal and equitable title.
- The transfer is between spouses, including a transfer to a surviving spouse or a transfer due to a dissolution of marriage.
- For a publicly traded company, the cumulative transfer of more than 50 percent of the ownership of the entity that owns the property occurs through the buying and selling of shares of the company on a public exchange. This exception does not apply to a transfer made through a merger with or an acquisition by another company, including an acquisition by acquiring outstanding shares of the company.
Additionally, when a property changes use from homestead, agriculture, and conservation purposes, the Non-Homestead assessment limitation begins the following January 1. The market and assessed values are equal in the first year of a Non-Homestead assessment limitation.
For Non-Residential, the assessment limitation resets following a qualifying improvement* (meaning any substantially completed improvement that increases the just value of the property by at least 25 percent) or change of ownership or control except the following:
- The transfer of title is to correct an error.
- The transfer is between legal and equitable title.
- For a publicly traded company, the cumulative transfer of more than 50 percent of the ownership of the entity that owns the property occurs through the buying and selling of shares of the company on a public exchange. This exception does not apply to a transfer made through a merger with or acquisition by another company, including acquisition by acquiring outstanding shares of the company.
Notably left out of Florida Statute 193.1555 (Non-Residential Category) is the exception for transfers between husband and wife, including a transfer to a surviving spouse or a transfer due to a dissolution of marriage.
*Improvement is defined as: an addition or change to land or buildings which increases their value and is more than a repair or a replacement.
If a business is sold and its holdings consist of real property, does that constitute a transfer?
Yes. A transfer of property may include the exchange or sale of stock or business holdings. If no deed is recorded the new owner is required to notify the Property Appraiser’s office using a state form DR-430.
What happens to my 10% cap if I file for the homestead exemption?
The year your homestead exemption takes effect, the 10% cap is removed and the value that had not been taxed in previous years becomes taxable again.