Tax & Legal
Florida's homestead exemption saves homeowners thousands in property taxes each year. Understanding what happens to your exemption when you sell - and how portability works - is essential for making smart financial decisions.
The Florida homestead exemption, established under Article VII, Section 6 of the Florida Constitution, provides a $50,000 reduction in the assessed value of your primary residence for property tax purposes. The first $25,000 applies to all property taxes including school district taxes. The second $25,000 applies to assessed values between $50,000 and $75,000 and excludes school district taxes. For a home assessed at $200,000, the exemption saves approximately $750-$1,000 per year depending on your county's millage rates.
To qualify, the property must be your permanent residence as of January 1 of the tax year, you must be a Florida resident, and you must file for the exemption with your county property appraiser by March 1. The exemption is lost when you sell the property because it is no longer your primary residence. However, the more valuable benefit - the Save Our Homes assessment cap - can be transferred through portability.
Save Our Homes (SOH), established by a 1992 constitutional amendment (Article VII, Section 4), caps the annual increase in assessed value of homestead property at 3% or the Consumer Price Index, whichever is lower. Over time, this cap creates a growing gap between your assessed value (what you pay taxes on) and market value (what the property is actually worth). This gap is called the SOH benefit or SOH differential.
For Florida homeowners who have owned their home for 10-20 years, the SOH benefit can be enormous. A home purchased for $150,000 in 2006 might have a current market value of $400,000, but an assessed value capped at $200,000 due to the 3% annual increase limit. That $200,000 differential means the homeowner is paying property taxes on $200,000 less than the property is worth - a savings of $2,000-$4,000 per year depending on the county.
When you sell your homestead property, the SOH cap resets. The new owner will be assessed at the property's full market value (just value). This is why some Florida homeowners feel "locked in" to their current home - they fear losing their SOH benefit will dramatically increase their property taxes if they move. Portability was created to address this concern.
Florida's portability provision (Article VII, Section 4(d)) allows homeowners to transfer up to $500,000 of their Save Our Homes benefit from their old homestead to a new homestead anywhere in Florida. This means you can sell your home, buy a new one, and carry your tax savings with you - as long as you follow the rules and deadlines.
Portability works differently depending on whether your new home costs more or less than your old home. If your new home has a higher just value, you transfer the full dollar amount of your SOH differential (up to $500,000). If your new home has a lower just value, you transfer a proportional amount of the differential based on the ratio of the new home's value to the old home's value.
Example: Your old home had a market value of $400,000 and an assessed value of $200,000 - a $200,000 SOH benefit. If you buy a new home for $500,000, you transfer the full $200,000 and your new assessed value starts at $300,000. If you buy a new home for $300,000, you transfer a proportional amount: ($300,000 / $400,000) times $200,000 = $150,000 in portability. Your new assessed value would be $150,000.
Portability has strict deadlines that you must follow. You must establish a new homestead within three tax years of January 1 of the year you abandoned (sold) your old homestead. This gives you approximately two to three calendar years to purchase a new Florida home and file for homestead and portability.
To claim portability, you file for homestead exemption on your new property by March 1 of the year following purchase. On the homestead application, you indicate that you are transferring a SOH benefit from a previous homestead. You provide the address and county of your previous homestead property. The property appraiser's office calculates your portable amount and applies it to your new property's assessment.
Missing the March 1 filing deadline means losing portability for that tax year. If you are still within the three-year window, you can file the following year. If the three-year window has closed, the portability benefit is permanently lost. This deadline is the single most important date for Florida homeowners who are selling and buying.
When you sell your homestead property, the homestead exemption ends on the date of sale for the following tax year. You will receive the full homestead benefit for the year in which you sell. For example, if you sell in June 2026, you receive the full 2026 homestead exemption. Starting January 1, 2027, the property is no longer homesteaded (unless the buyer files for their own homestead).
Property taxes are prorated at closing in Florida. The seller pays taxes from January 1 through the closing date, and the buyer pays from the closing date through December 31. Since taxes are paid in arrears in Florida (the tax bill comes in November for the current year), this proration is typically handled as a credit to the buyer at closing. The homestead exemption applies for the full year of sale, so the proration is based on the homesteaded tax amount.
Capital gains taxes are a separate consideration. Under federal tax law, the homestead exemption does not affect capital gains. However, the primary residence capital gains exclusion (up to $250,000 for individuals, $500,000 for married couples filing jointly) does apply. If you have lived in the home as your primary residence for at least two of the last five years, you can exclude most or all of your gain from federal income tax. Florida has no state income tax, so there is no state-level capital gains tax on the sale.
Plan your sale and purchase timeline around the portability deadlines. If you sell late in the year, you have more time to find and purchase a new home before the three-year portability window closes. If you sell early in the year, your window is slightly shorter in practical terms because you need time to close on a new property and file by March 1 of the appropriate year.
If you are selling to downsize or relocate within Florida, calculate your portability benefit before deciding on a sale price. The tax savings from portability can be worth $1,000-$4,000 per year in perpetuity, which has significant present value. Knowing this number helps you make informed decisions about whether to sell now or wait.
If you are selling and not purchasing another Florida home - leaving the state, moving into a rental, or selling to a family member - portability is not applicable. Your SOH benefit will be lost permanently. This is a factor to consider in your timing and financial planning. Some homeowners delay their move specifically to maximize the years of SOH benefit before leaving Florida.
Cash sales do not affect homestead or portability differently than traditional sales. Whether you sell to a cash buyer, through a realtor, or FSBO, the homestead and portability rules are identical. The speed of a cash sale can actually benefit portability planning by giving you more certainty about your sale date, which helps you plan the purchase of your next home within the portability window.
Yes, the homestead exemption ends when you sell. However, you can transfer up to $500,000 of your Save Our Homes benefit to a new Florida homestead through portability if you purchase within three tax years.
You must file for homestead exemption and portability on your new property by March 1 of the year following purchase. You have up to three tax years from the year you sold your old homestead to establish a new one.
Yes. Portability works across all 67 Florida counties. You can sell in Miami-Dade and purchase in Duval and transfer your Save Our Homes benefit to the new county.