Do you own investment properties in Florida that aren’t your primary residence? If so, you’re likely familiar with the risks that come with volatile market conditions and potential liabilities.
With real estate values fluctuating, an unexpected hike in property taxes could throw your investment strategy off balance. However, Florida’s cap assessment limitation for non-homestead properties can offer a safety net, providing predictability and stability in your financial planning.
The Florida Planning & Probate law firm can help you navigate these complexities and ensure that your assets are well protected.
WHAT IS NON-HOMESTEAD INVESTMENT PROPERTY IN FLORIDA?
Non-homestead investment properties in Florida encompass a variety of property types that are not the owner’s primary residence, acquired with the intention of earning a return. These returns can come in the form of rental income, capital appreciation, or both.
In the context of non-homestead investment properties in Florida, rental income is revenue received from tenants who occupy the property. This could be residential tenants if you own a house, an apartment, or a condo; or it could be commercial tenants if you own retail space, office buildings, or warehouses.
FUTURE RESALE AND APPRECIATION
Capital appreciation is another way that non-homestead investment properties can yield a return. As property values increase over time due to factors like market demand, economic growth, or improvements to the property or surrounding area, the potential for selling the property at a higher price than its purchase price also increases.
COMBINING RENTAL INCOME AND FUTURE RESALE
Many investors aim to capitalize on both rental income and capital appreciation when investing in non-homestead properties in Florida. By doing this, they can earn regular income through rent payments while also hoping for the property value to increase over time for a larger payoff when the property is eventually sold.
While these assets can offer significant income potential, they come with unique challenges and legal considerations, particularly when it comes to property taxes. Unlike homestead properties, these assets don’t qualify for Florida’s homestead exemption, meaning their taxes aren’t capped at the same low rate.
10% CAP ASSESSMENT LIMITATION FOR NON-HOMESTEAD PROPERTY
In Florida, the 10% cap assessment limitation for non-homestead properties, also known as Amendment 1, was enacted to protect non-homestead investment property owners from large annual increases in the assessed value of their property for tax purposes.
Under this amendment, which was approved by Florida voters in 2008 and went into effect starting in 2009, the annual increase in assessed value of a non-homestead property is capped at 10%, regardless of how much the property’s actual market value may have increased.
This is designed to provide some measure of predictability and stability in property tax liability for owners of non-homestead investment properties, such as landlords, business owners, and owners of second homes. Without this cap, these property owners could potentially face steep, unexpected increases in their property tax bills if their properties rapidly appreciate in value.
It’s important to note, however, that this cap does not apply when the property changes hands or undergoes significant improvements. In such cases, the property’s assessed value is reset to match its market value.
PROTECTING YOUR NON-HOMESTEAD INVESTMENT PROPERTY WITH FLORIDA PLANNING & PROBATE LAW FIRM
Understanding and navigating these laws can be complex, but you don’t have to do it alone. As an experienced Florida asset planning attorney, Geoffrey R. Langbart at the Florida Planning & Probate law firm can guide you through this process, helping you leverage these protections to the fullest and develop a comprehensive asset protection strategy.
Whether you own a single rental property or an extensive portfolio of non-homestead properties, a South Florida asset planning attorney can provide the expert advice and legal services you need to safeguard your assets against potential creditors and liabilities.
Don’t leave your financial future to chance — consult our asset planning attorney in Sunrise, FL, today and let us help you build a secure tomorrow.