A homestead exemption is one of the many benefits of owning a home, but what happens when you sell your home and move to a new place as your primary residence? Homestead Portability comes in.
Homestead Exemption & Portability
When you declare a home as your primary residence, you are eligible for a homestead tax exemption in most states. While it varies state by state, generally, declaring your primary residence as your homestead means you only pay property taxes on a value lower than the appraised value of your home and your home is protected from creditors in the event of a spouse death or bankruptcy. Some states automatically apply homestead exemption to your primary residence, while others require that you file for it.
When you sell your current home or change primary residences, you are eligible to transfer your benefit (accrued property tax savings) from one property to another. You must check your state’s regulations for exact values, but this allows you to lower the assessed value on your new residence, in most cases.
Florida Homestead Portability
In 1992, Florida enacted the “Save Our Homes” (SOH) Constitutional Amendment that limits the annual increase in assessed property value to no more than 3% or the Consumer Price Index for the previous year.
According to the Florida Department of Revenue, “If you are moving from a previous Florida homestead to a new homestead in Florida, you may be able to transfer, or “port,” all or part of your homestead assessment difference. If you are eligible, portability allows most Florida homestead owners to transfer their SOH benefit from their old homestead to a new homestead, lowering the tax assessment and, consequently, the taxes for the new homestead.
“To transfer the SOH benefit, you must establish a homestead exemption for the new home within two years of January 1 of the year you abandoned the old homestead (not two years after the sale).”
“You must file the Transfer of Homestead Assessment Difference (Form DR-501T) with the homestead exemption application. The deadline to file these forms is March 1.”
“Complete all forms and applications required for the exemption and file them with your county property appraiser. If the property appraiser denies your application, you may file a petition with the county’s value adjustment board.”
Homestead portability is a misunderstood benefit that applies to many homeowners that are either upgrading or downgrading residences. If you are purchasing a new home for your primary residence and want to learn about homestead portability in your area, reach out to a mortgage expert or property appraiser.
Are you a high earner with your sights set on a luxury property? Or is your ideal home priced higher than the limits set by the FHFA? There may be a financing product for when a conventional or high-balance loan doesn’t cut it.
What Is a Jumbo Loan?
A Jumbo Loan is a non-conforming conventional mortgage used for property priced higher than the maximum loan amount set by the Federal Housing Finance Agency (FHFA). The FHFA sets limits on the maximum loan amount for a single-family home depending on average prices in the area. In most US counties, the loan maximum is $484,350, but in higher-priced areas, it’s $726,525, as of 2019. A jumbo loan cannot be purchased by Fannie May and Freddie Mac because it is more than the limit set by FHFA—which the two private companies follow.
Jumbo loans are only available in certain counties and have special underwriting requirements due to the risk involved. A jumbo mortgage can be used to finance a primary residence or investment property, provided that the buyer meets the strict requirements. Surprisingly, jumbo loans often have interest rates comparable to conforming loans, or even lower.
Jumbo Loan Requirements
Jumbo mortgage requirements are much stricter than for conforming loans, as the lender has no protection from losses if the borrower defaults. To start, you’ll need a credit score generally 680 or higher, high earnings, low debt-to-income ratio and abundant cash reserves. In addition, you’ll likely need to prove you have cash to cover up to one year of mortgage payments. Expect a down payment between 10-30% and higher closing costs due to the size of the purchase. Financial documentation like pay stubs, tax returns, W-2s and the like will be required during the application process.
Tax Implications of a Jumbo Loan
Before taking out a jumbo loan, investigate your tax implication with a tax professional to learn if it’s truly the most financially sound financing option for you. As of December 2017, tax law allows property owners to receive a mortgage interest deduction on only up to $750,000 of mortgage debt and a maximum of $10,000 in property tax deductions. It’s possible a jumbo loan will cost you more in interest than two smaller conforming loans.
Getting a Jumbo Loan
At Gulfside Mortgage Services, we offer a 10% down Jumbo Loan with no PMI (Private Mortgage Insurance).
Contact a mortgage expert to learn if you qualify for a jumbo loan and if it’s right for your next luxury purchase. These loans have varying interest rates so it’s important work with a qualified mortgage lender and shop around for the best rate.
It can be hard to relax on vacation if you’re worried about what’s going on back home. But a few simple measures can help properly secure your house and give you the peace of mind you need to enjoy your time away.
Hold mail and deliveries. — The U.S. Postal Service makes it easy to put a temporary hold on your mail. And don’t forget to suspend newspaper and other recurring deliveries, like Amazon subscriptions.
Make it look like you’re home. — Use automatic timers for indoor lights and maybe a TV or two. And keep some curtains open; closed curtains suggest that you’re away and give criminals more cover.
Recruit a friend or neighbor. — Ask a neighbor to keep an eye out for unexpected deliveries and park their car in your driveway from time to time. If you’ll be gone for an extended period of time, arrange for someone to mow your lawn.
Freeze your social posts. — Don’t announce your travels on social media, and wait to share pictures until you’re back home. Burglars are increasingly scouring social networks for victims. Check your social network settings, too, so you’re not auto-tagged in pictures by your travel companions.
Monitor from afar. — From cameras and sensors to remote monitoring and notifications, there are numerous options for added protection. Some home security systems can even send you an alert when someone’s at your door.
Secure your valuables. — Before you go, make an indoor sweep and lock up sensitive financial statements, jewelry, laptops and other valuables for additional security and peace of mind.
Lastly, it’s a good idea to give your financial institutions a heads-up about your travel plans. A stream of out-of-state or out-of-country charges could prompt an unnecessary alert that puts a hold on your account.
Vacation home sales are booming, particularly in beach and boating locations in the South and West. If you’ve always dreamed of a home away from home, be sure to ask yourself the following questions.
How will you use it?
Will it be a seasonal home and future retirement spot? A vacation home you’ll also rent out? Pick a place you love, but heed the advice of experts who say the sweet spot is a destination that’s no more than a three-hour drive from a major metro area. The proximity can help with resale, plus it usually draws a larger pool of potential renters. If rental income is important, ensure local laws or association bylaws allow it before making a purchase.
Can you afford all of the costs?
Don’t just look at the purchase price to determine if you can swing it. You’ll need to also factor in property and insurance taxes, potential homeowners or condo association fees, and the cost of utilities and maintenance. Your tax implications will vary, too, depending on how you decide to use the home. If you rent it out for more than 15 days a year, for instance, you’ll need to declare the income to the IRS.
Do you have a plan for when you’re gone?
If you live more than a couple of hours away, a local property manager may be helpful for overseeing tenants and dealing with maintenance issues. You’ll also want to take measures to protect your home when no one is there. A security system is a no-brainer, and it might even reduce insurance costs. Other good bets include motion-sensitive exterior lights, timers for indoor lighting, and a car parked in the drive every so often (courtesy of a neighbor).
When spring arrives, the urge to get outside and start planting can be hard to resist — even for those with a brown thumb. Here are some tips on what to do and when to do it for a healthy, bountiful garden.
Early Spring — You may find yourself snowed in or rained out when spring first begins, or maybe you’re just deterred by the muddy state of your yard. Be ready to act when conditions are ripe.
Rake leaves, clear sticks and remove any debris that could hinder proper drainage.
Pull early-growing weeds to help reduce weeding later in the season.
Mid-Spring — Once things have dried out, you can begin to make some real headway.
Start a compost pile to enrich the soil and help it retain water. Grass clippings, leaves, coffee grounds, and fruit and vegetable scraps are common compost items.
Check your plant hardiness zone to determine the best vegetables to grow in your climate and decide what you’ll be planting.
Use a planting guide to find out the best time to start sowing seeds or transplanting starter plants, and get planting. Consider carrots, tomatoes, lettuce, cucumbers and herbs.
Late Spring — This is when your gardening really kicks in.
Establish a plan for dealing with common garden pests before they become a potential problem. Here’s a helpful series on organic pest control.
Add an even layer of mulch to the soil around new plantings to deliver nutrients, control weeds and conserve moisture.
Maintain your growing garden with adequate water and fertilizer for a plentiful harvest.
