Lew Nonnenmocher, RE/MAX on the Coast
 
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Florida Homestead Exemption

What is it, Who Qualifies, and How Much?

 

CLICK HERE for the brochure put out by the Escambia County Tax Assessor's office describing the Florida Homestead Exemption and other exemptions available as deductions from the assessed value of your home.

A couple of key points:

  • You must be living in the home as of January 1 of the year you're claiming the exemption;
  • You must file for the exemption prior to March 31 of the year you're claiming the exemption;
  • You must be a Florida resident (drivers license, voter's registration, ect);
  • If you purchase a home after January 1st, and the previous owner had the exemption, you're
    taxes for that current year will be reduced by the exemption amount for that current year.  Essentially,
    you pick up the benefits of their exemption at the start of the year.
  • Your taxable value will be decreased by $50,000.

Besides, the exemption, there are few more very important reason to file for homestead:

Under the "SAVE OUR FLORIDA HOMES" Act, a homesteaded property's assessed value may not increase more than 3% per year.  This was a huge break during those years where we were experiencing 15-20% increases in value in a year.

FLORIDA ASSET PROTECTION - Homestead Protection

In Florida, our home is truly our castle, a castle that is impenetrable by creditors. The Florida Constitution exempts homestead property from levy and execution by judgment creditors. Florida courts have liberally expanded definitions of homestead property which includes more than just a single family house. Condominiums, manufactured homes, and mobile homes are also afforded homestead protection. The Constitution defines homestead as one’s principal place of residence up to one-half acre within a municipality and up to 160 contiguous acres in any county in Florida.  To qualify for homestead protection, a debtor must be a Florida resident and the homestead property must be his primary place of residence.  Property purchased as a future residence is unprotected until the property is occupied as a principal residence.  A second home or investment property cannot be considered a Florida homestead.  Only "natural persons" qualify for homestead protection so properties titled in the name of irrevocable trusts, corporations, or partnerships will not qualify.

  Property owned by a living trust can be homestead property. A newly-enacted Florida Statute provides that property owned by a land trust may be homestead property.

What makes Florida’s homestead protection such a powerful asset protection tool is its unlimited monetary protection. A Florida resident can invest millions of dollars in large estate homes and farms and protect the full value of these luxury residences under Florida’s homestead law.  Under a Florida Supreme Court ruling, a person can transfer unprotected, non-exempt assets to his homestead at any
time by either buying a new home or reducing the principal balance of an existing mortgage and protect this money under the homestead umbrella, even if the asset transfer was clearly designed to hide money from creditor claims.

Homestead is not protected against tax liens, mortgages, homeowner association assessments, or from mechanics liens associated with labor or materials to repair or improve the homestead property. Also, the asset protection benefits of homestead should not be confused with the homestead tax exemption.

Homestead protection may not apply if the debtor files bankruptcy.  Under the new bankruptcy law, homestead protection is available in bankruptcy up to $125,000 unless the debtor occupied his current Florida homestead property and previous Florida homestead properties for a continuous 40-month period.  Also, transfers of cash into homestead within 10 years intended to defraud creditors may be challenged by the bankruptcy trustee.  The new bankruptcy law has no effect on Florida's unlimited homestead protection outside of bankruptcy.

Your next question may be, what constitutes me being a Florida resident?  This question particularly comes up with folks looking to buy a second home here in Florida.   The answer:

 Florida Residency

Only Florida residents may take advantage of Florida’s liberal asset protection laws. Whether or not you qualify as a Florida resident depends on whether your circumstances and your actions demonstrate your intent to establish a Florida domicile. Your primary residence is the place you call "home."  When "going home" means you are returning to your residence in Florida then you are probably a Florida resident.

Florida courts have considered a variety of facts and circumstances indicative of a person’s ties to Florida.   Florida Statute 222.17 states that a person can show intent to maintain a Florida residence as a permanent home by filing a sworn Declaration of Domicile with the clerk of the circuit court. The Statute does not exclude concurrent ownership of a residence in another state provided that primary residence is claimed only in Florida. Florida Statute 196.012 defines a permanent residence as "that place where a person has his or her true, fixed, and permanent home and principal establishment to which, whenever absent, he or she has the intention of returning."

Florida Statue 196.015 lists the following relevant factors that may be considered in determining a person's intent to establish permanent Florida residency:

  • Formal declaration of residency (Declaration of Domicile);
  • Informal statements regarding residency;
  • Place of your employment;
  • Termination of your previous residency in another state or country;
  • Registration to vote in Florida;
  • A Florida drivers license;
  • Florida license tags on all your vehicles;
  • Using a Florida address on your federal income tax forms; and/or
  • Previously filed Florida intangible tax returns.
Naturally, the longer your ties to Florida the stronger your claim to Florida residency.


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