One of the attractive aspects of owning a home in Florida is the Homestead Exemption. There are some things many people don’t know or understand about Homestead, and it can be a bit more complicated than they realize.
When was Florida Homestead created?
Florida Congress passed The Florida Homestead Act in 1862. No one in Florida “automatically” gets a homestead exemption, and the application process is different dependent on the county you reside within.
There are various aspects of homestead exemption under Florida Law. The different aspects of homestead exemption are:
- Exemption from forced sale before and at death, per Art. X, Section 4(a)-(b) of the Florida Constitution ;
- Restrictions on devise and alienation, Art. X, Section 4(c) of the Florida Constitution;
- Exemption from taxation per Art. VII, Section 6 of the Florida Constitution.
- For tax purposes the year-to-year increase in assessed value of the homestead is limited to the lesser of 3% or the percentage change in the Consumer Price Index.
Typically, a homestead exemption prevents losing your home to creditors. But, there are certain types of creditors where this protection won’t apply, sometimes referred to as “super creditors.”
- Owed property taxes or state and/or federal tax liens;
- Parties to whom the property was specifically pledged as credit for a mortgage;
- Contractor/mechanics liens for the improvement or repair of the property;
- Liens that existed before the homestead existed.
Many homeowners will apply for homestead and not realize that these factors can impact their home.
How Do I Get A Homestead Exemption?
To get a homestead exemption on a property in Florida you must prove residency and show the property as your primary domicile (residence). There are several forms of proof accepted to prove residency and get the property homesteaded.
IF you are filing for the first time, be prepared to answer these questions :
- Whose name or names were on the title on January 1?
- What is your social security number and your spouse’s social security number?
- Were you or your dependent living in the dwelling on January 1?
- Do you claim residency in another county or state?
Your property appraiser may ask for any of the following items to prove your residency:
- Proof of previous residency outside Florida and date ended
- Florida driver license or identification card number
- Evidence of giving up driver license from another state
- Florida vehicle license plate number
- Florida voter registration number (if US citizen)
- Declaration of domicile and residency date
- Name of current employer
- Address listed on your last IRS return
- Dependent children’s school location(s)
- Bank statement and checking account mailing address
- Proof of payment of utilities at homestead address
If I Move, What Happens to my Homestead Exemption? Why is the Save Our Homes Assessment Limitation Important?
After the first year a home receives a homestead exemption and the property appraiser assesses it at just value, the assessment for each following year cannot increase more than 3 percent or the percent change in the Consumer Price Index (CPI), whichever is less. This is called the “Save Our Homes” (SOH) assessment limitation. The accumulated difference between your assessed value and the just (market) value is your SOH benefit. [See section 193.155, Florida Statutes.] Even if the value of your home decreases, your assessed value may increase, but only by this limited amount. Your assessed value will never be more than the just value of your home.
In many situations, it is beneficial to “port” your exemption from a previous home to a new one. 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).
In some cases, someone will buy a home and then purchase a secondary residence. The homestead can only be applied to one, and the primary residence. Understanding what defines that primary residence is important, and the implications of porting over homestead to a new home and potentially incurring a large tax increase on the first property.
I am serving in the military and serving outside of Florida, will I lose my Homestead?
Under Florida Statute, valid military orders transferring such member are sufficient to maintain permanent residence for the purpose of s. 196.015 for the member and his or her spouse. Every person who is entitled to homestead exemption in this state and who is serving in any branch of the Armed Forces of the United States, shall file a claim for such exemption as required by law, either in person, or, if by reason of such service he or she is unable to file such claim in person he or she may file such claim through his or her next of kin or through any other person he or she may duly authorize in writing to file such claim.
If I am a “snow bird” can I lose my Homestead Exemption?
Many property owners are confused as to whether they can rent their entire dwelling for long periods of time and retain the benefit of homestead. Long-term rentals are interpreted by the owner’s long-term rental activity, coupled with his or her implied absence from the property, this can signify the owner’s intent to reside elsewhere. Therefore, the owner’s departure and residence elsewhere, coupled with the conversion of his or her home into a commercially oriented use (a rental), reveals an “intent” to abandon the homestead. As you can imagine this is a complicated area and something that you should get professional advice to assure you retain your homestead benefit.
The Florida Homestead can really help homeowners, but it can be a complicated aspect of home ownership. If you are buying or selling your home, dealing with an estate, or financial difficulties, its best to speak with your attorney to assure that you understand how homestead protects you and your property. Call us today for more information.