Non-Homestead 10% Cap
All real property that does not receive a homestead exemption or other property classification is considered non-homestead and is subject to a 10% limitation on the increase of assessed value per year.
Non-homestead property increases in assessed value are limited to no more than 10%, as compared to the previous year, regardless of the market value increase. However, the assessed value may increase up to 10% per year, even if the market value remains the same (see Recapture Rule). The 10% cap does not apply to school district taxes.
The non-homestead 10% cap benefit is removed upon a qualifying improvement being made, a change of ownership, or control of the real property.
A qualifying improvement is considered an improvement that is substantially completed as of January 1 of the tax year and increases the just value of the property by at least 25 percent. An improvement made to the real property of greater than 10% but less than 25% will “go over the cap” meaning it is not covered by the 10% cap, the cap protects your property from increases resulting from the market not improvements the owner makes to the property resulting in the higher value.
Florida Law recognizes a change of ownership or control to mean:
- A sale or foreclosure,
- A transfer of legal title or beneficial title in equity to any person, or
- A cumulative transfer of control, or of ownership of more than 50%, of the legal entity that owned the property when it was last assessed at just value.
- If a business is sold and its holdings consist of real property, that does constitute a transfer.
The market and assessed values are equal the first January 1 following a change of ownership or control. The 10% cap begins the following January 1.
When a property changes ownership through any means other than a recorded deed, the owner must file a Change of Ownership or Control Form (DR-430), which is available on the Florida Dept of Revenue’s website.
There are certain exceptions to the change of ownership rules, when one of the following events below happens regarding a change of ownership or control the property will not be reassessed at market value.
- The transfer of title is to correct an error.
- The transfer is between legal and equitable title.
- The transfer is between husband and wife, 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.
Other Non-Homestead Cap Changes:
When a property changes use and is no longer used as a homestead or other property classification, the market and assessed values are equal the first January 1 after a change of use. The 10% cap begins the following January 1.
Additionally, when a non-homestead property files for and receives a homestead exemption, the market and assessed values are equal the first January 1 after qualifying for homestead. The Save-Our-Homes Cap then applies to the property the following January 1.