Embarking on a new chapter in life by moving to Florida often brings plenty of excitement and a bit of trepidation.
No doubt, the prospect of establishing a new home within an upscale community of Tampa Bay, a city and region that is among the most dynamic urban areas in the country, cannot be overstated. Between incredible schools, extraordinary real estate, and the gorgeous Gulf Coast, which is never too far away, it's a move you'll thank yourself for making over and over.
Of course, any move, especially one made from one state to another, comes with an adjustment period. From a new routine to the change in scenery to acclimating to near-perfect year-round weather, some changes are easier to absorb than others. Moving to Florida also brings unique nuances not commonly found in other states. Specifically, knowing what a Community Development District (CDD) is and how it differs from the more familiar Homeowners Association (HOA).
Below, we explore both entities and how they might impact your newly acquired Florida residency. We also explain Florida's Homestead Exemption and why you'll want to take advantage of this financial benefit.
Understanding Community Development Districts
In Florida, a Community Development District or CDD is a special-purpose unit created by state or local government to provide, finance, and manage public infrastructure and services within a specific development or community. The public infrastructure can include any of the following public structures, facilities, or services:
- Roads, bridges, and street lighting
- Water supply and management
- Sewer or wastewater management
- Drainage systems
- Parks, including areas of conservation and recreational facilities
- Transportation, including transit facilities, parking infrastructure, and management
- Fire prevention, wetland management and mitigation, and mosquito control
Once created, CDD funding comes from bonds repaid by special assessments on properties within the district. The arrangement provides a structured way to finance neighborhood development without placing the entire financial burden on the local government or developers.
A board of supervisors elected by property owners within the district governs the CDD. The board manages the district's operations, finances, and service provision, ensuring a community's infrastructure needs are met efficiently.
A CDD represents a sophisticated approach to community planning and development, focusing on creating and maintaining high-quality public infrastructure and services. Their formation, governance, and financial mechanisms ensure the long-term sustainability and enhancement of a community's living standards.
The Role of Homeowners Associations
While CDDs focus on infrastructure and public services, a Homeowners Association or HOA focuses directly on community governance and maintenance of common areas within the neighborhood.
An HOA is a private organization initially established by a community's developer, with control transferring over to community homeowners once development is complete. Homeowners in established neighborhoods with no prior HOA can also establish an HOA.
A board of directors elected by community residents governs the HOA. The HOA sets rules and guidelines for property appearance, use of common areas, and architectural standards to maintain property values and ensure the community's aesthetic harmony.
Residents pay dues to the HOA to fund the maintenance of common areas, community facilities, and sometimes additional services like security and recreational activities. Homeowners Associations play a pivotal role in the fabric of community life within many residential developments in Florida and across the United States.
These private entities are foundational to maintaining a community's quality, consistency, and value through governance, maintenance, and community-building efforts. Understanding the multifaceted roles and responsibilities of HOAs can help potential homeowners grasp the full scope of living within an HOA-governed community.
CDD vs. HOA: Key Differences
While the CDD and HOA contribute to the structure and function of community living, they serve different purposes.
The CDD is a government entity focused on large-scale infrastructure and services, funded through bonds and special assessments. It's a tool for financing improvements and ongoing maintenance of the public infrastructure within a given community.
In contrast, the HOA is a private organization whose sole purpose is establishing and overseeing a community's rules and regulations and common area maintenance, with funding directly from homeowner dues. It's not uncommon for a Florida community to have a CDD and an HOA, each playing a specific role in community development and governance.
Florida's Homestead Exemption
At its core, the Florida Homestead Exemption offers financial relief to homeowners by reducing the taxable value of their primary residences. Specifically, the law allows a deduction of up to $50,000 from the assessed value of your primary or permanent home. Here's how it breaks down:
- The first $25,000 of value is completely tax-exempt, including those levied by local school districts.
- The second $25,000 applies to assessed values between $50,000 and $75,000 and is exempt from the non-school portion of property taxes.
This exemption lowers your annual tax bill and offers protection against rapid increases in property taxes. Once you receive the Homestead Exemption, any annual rise in your home's assessed value is capped at the lower of 3% or the change in the Consumer Price Index (CPI); some exceptions may apply. This provision ensures your property taxes remain manageable year over year.
Eligibility and Requirements
To take advantage of the Homestead Exemption, you'll need to meet specific requirements, including:
- Ownership and Residency: You must hold legal or beneficial title to the home by January 1 of the year you apply and establish the property as your legal residence.
- Deadline: The statutory filing deadline is March 1. If the date is on a weekend, the deadline is the next business day.
- Proof of Residency: Evidence of Florida residency, such as a Florida driver's license, is required. Note that a license with a "Valid in Florida" designation or an out-of-state license is not acceptable. Temporary visa holders cannot claim the Homestead Exemption.
- Notification of Changes: You must inform the Property Appraiser if there's a change in the use of the property or your status that affects its exempt status.
- Additional Documentation: Proof of U.S. citizenship or permanent residency, your social security number, and further documents may be required, depending on your situation.
First-time filers should anticipate having to provide the following:
- Names on the title on January 1
- Yours and your spouse's social security number
- Your status or status of a dependent living in the home on January 1
- Whether you claim residency in another county in Florida or another state (you cannot claim a tax exemption in Florida and another state simultaneously).
Application Process
Applications for the Homestead Exemption are accepted year-round, with a statutory filing deadline of March 1. Should you miss this window, you can submit a late application up until the 25th day after the mailing of the Proposed Property Taxes notice, typically sent in August.
Ready to explore the best of Tampa Bay real estate?
Whether you're moving to Tampa from out of state and need help transitioning into a new city or are a current Tampa Bay resident looking to buy or sell,
contact Nuvista Real Estate Group today to start your journey. With the combined experience and expertise of Vioma Lorenzo and Alexandra Alvarez and their team of local Realtors, they will help you successfully navigate Tampa's luxury real estate market.
