What is Non-Homestead assessment limitation?

The Non-Homestead assessment limitation limits the increase of a real property assessment at 10% each year for non-school board assessed values. The Non-Homestead assessment limitation is available to real property not receiving a homestead exemption or classification.  It does not apply to tangible personal property.  

How does Non-Homestead assessment limitation work?

Increases in real property 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 (commonly referred to as “recapture”); unlike Homesteaded property, which can only go up by 3% or the CPI, whichever is lower.  

The Non-Homestead assessment limitation does not apply to the School Board portion of property taxes.

Can the Non-Homestead assessment limitation be greater than the market value?

The assessed value of a property can never be greater than the market value.

Do you have to apply for Non-Homestead assessment limitation?

No. The Non-Homestead assessment limitation automatically applies to qualified properties.  

Can all real property types benefit from Non-Homestead assessment limitation?

The Non-Homestead assessment limitation applies automatically to all properties except the following: properties receiving the homestead exemption, agriculture classification, land used for conservation purposes, and  tangible personal property. The Non-Homestead assessment limitation also does not apply to the school board portion of assessments.  

When does Non-Homestead assessment limitation reset?

Residential properties with 9 units or less:

The Non-Homestead assessment limitation resets following a change in ownership or control except the following:   

• The transfer of title is to correct an error.
• The transfer is between legal and equitable title.
• The transfer is between spouses, 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.

Additionally, when a property changes use from homestead, agriculture, and conservation purposes, the Non-Homestead assessment limitation begins the following January 1.  The market and assessed values are equal in the first year of a  Non-Homestead assessment limitation.  

All other real property including commercial properties:

The Non-Homestead assessment limitation resets following a qualifying improvement or change of ownership or control except the following:     

• The transfer of title is to correct an error.
• The transfer is between legal and equitable title.
• 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 acquisition by another company, including acquisition by acquiring outstanding shares of the company.
• A qualifying improvement means any substantially completed improvement that increases the just value of the property by at least 25 percent.

If a business is sold and its holdings consist of real property, does that constitute a transfer?

Yes. A transfer of property may include the exchange or sale of stock or business holdings.  If no deed is recorded the new owner needs to notify the Property Appraiser’s office with a state form (Department of Revenue form DR430).

Are there any exceptions to Non-Homestead reset?

A transfer between legal and equitable title is not subject to reassessment. 

Another exclusion to the transfer reassessment is when it occurs between spouses. This includes when the transfer is the result of a divorce or to a surviving spouse. However, this is only applicable to residential class properties and not to non-residential class properties.

It should also be stated that a re-recording of a deed to correct an error is not cause for resetting the assessment. This is not a transfer, but a correction to a previous transfer.