Understanding Florida's 3% Cap law, also known as
"Save our Homes"
Q. What does the 3% cap mean to Florida residents?
A. The cap limits the increase in the annual assessment of homestead properties in Florida to 3% or to the Consumer Price Index, whichever is less. Also known as "Save Our Homes," Florida residents voted for the Constitutional Amendment in 1992 and it went into effect in 1995.
Q. Does the 3% cap limit property taxes?
A. No, it is a cap on the assessment of a parcel, not on the taxes paid. A property's assessment could stay the same or go down but property taxes could go up any given year because of millage increases levied by your local taxing authorities.
Q. Who qualifies?
A. You must own a residential property that already qualifies for the $25,000 Homestead Exemption. (Click here for Homestead Exemption requirements.) All other properties are not eligible. Approximately 50% of residential properties in Palm Beach County don't qualify for Florida's Homestead Exemption and are not entitled to the 3% cap.
Q. Does the 3% cap change the way property values are estimated by the Property Appraiser?
A. No, the Property Appraiser's Office responsibility is to determine the property's market value for a fair and equitable tax roll.
Q. What happens to the cap when I sell my home and buy a new house?
A. When a Homestead property sells, the cap is removed and the value is increased to market value January 1 of the following year. Similarly, if the home you purchased was subject to the cap, the cap is removed and the value is increased to market value the following January 1.
Q. I own a single family residence and have a Homestead Exemption. I also own the adjacent vacant lot under a separate property control number. What happens if I combine the vacant lot with my home? Will the new combined parcel be covered by the 3% cap?
A. Yes. The market value of the vacant lot will be added to the assessed (capped) value of the residence and the combined value will become the new base for the next tax roll.
Q. I own a duplex and live in one side and rent the other unit. Does all the property qualify for the 3% cap?
A. No. Only the homestead portion is eligible for the 3% cap. The Homestead portion is determined as a percentage of the total property value. Example: A property owner occupies one-half of a duplex. The half with the Homestead Exemption is eligible for the 3% cap. The half without the Homestead Exemption is income property and not eligible for the cap.
Q. Two brothers buy a parcel with one residence. One brother lives in the house and has a Homestead Exemption. The other brother does not hold a Homestead Exemption on the property. How does the 3% cap affect this parcel?
A. The market value of the parcel is divided equally. Only the Homestead portion qualifies for the 3% cap. The other half's assessment remains at market value.
Q. What happens with new additions and renovations?
A. The new addition's value is added to the assessed (capped) value and this is the property's new base value. Renovations and remodeling create certain problems and are handled on an individual basis. Generally, changes to the structural elements or sub-areas may result in new construction, and that value would be added to the prior assessed (capped) value.
For more information, please call Property Appraiser's Office at (561) 355-2866.
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