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Florida Homestead Exemption Basics

Patrick W. Ryskamp

The term “homestead” applies to an individual’s primary residence. The purpose of Florida’s homestead law is “to promote the stability and welfare of the state by encouraging property ownership and independence on the part of the citizen and by preserving a home where a family may be sheltered and live beyond the reach of economic misfortune.”  In re Ehnle, 124 B.R. 361, 363 (Bkrtcy. M.D.Fla. 1991).  The Florida Constitution affords two homestead benefits.  Article VII of the Constitution provides for a real estate tax benefit to property that qualifies as a primary residence.  Article X of the Constitution protects the primary residence from claims and liabilities.  The two benefits are often confused, but are distinctly different in their benefits and the determination of qualification.

The most widely known definition of the homestead exemption is the concept of the property tax benefit.  A natural person who is a Florida resident and has legal or equitable title to real estate used as a primary residence receives an annual deduction of $25,000 from the assessed value of the property, which in turn results in a tax reduction equal to the tax millage rate multiplied by $25,000.  More importantly, real estate tax increases on homestead property are capped each year at the lesser of three percent or the change in the Consumer Price Index.  No more than one exemption is permitted per home.  

If construction improvements are made to a homestead, the assessed value will increase in an amount equal to the value of the improvements.  The property appraiser will typically use the permit filed with the appropriate governmental authority to determine the specific dollar amount.  However, the newly adopted constitutional amendment, effective January 1, 2003, allows counties to exempt from taxation an increase in the assessed value of homestead property resulting from construction of living quarters for a parent or grandparent of the property owner who is 62 years old or older.

The initial application for homestead exemption may be filed at any time, in person, on or before March 1 of the year for which the exemption applies.  The local county property appraiser establishes the documentation necessary to establish homestead.  In order to qualify for the homestead exemption, an individual must meet the following qualifications prior to January 1 of the year for which the exemption is sought:

1) Permanently reside on the property;
2) Possess equitable title to the property recorded in the public records;
3) Establish primary residency in Florida by one of the following:
a) Register to vote; or
b) File a Declaration of Domicile with the Clerk of the Circuit Court;
4) Possess a valid Florida driver’s license; and
5) Register Florida vehicle tags for each privately owned vehicle.

When applying for homestead, applicants must bring the following documents as proof of ownership and Florida residence:  (1) deed or tax bill for the property; (2) voter’s registration card or declaration of domicile; (3) Florida driver’s license; (4) Florida vehicle registration; and (5) social security number.  Once homestead is established, it renews automatically unless the owner disclaims the homestead or transfers the property. 

If ownership of homestead property changes, the property is revalued as of the following January 1, and taxes are based on the new assessed value.  At the new valuation date, the three percent cap is removed, and the increase in taxes may be significant.  As a result, before transferring title of homestead property to a family member or third party for estate planning purposes or reasons other than the sale of the property, you should weigh the potential negative tax consequences of removal of the cap.  

If you move to a new primary residence, you must re-register with the county property appraiser’s office.  Additional exemptions are also available such as widow’s, widower’s, medical disability, and service connected disabilities.  If you have questions regarding the homestead application process or other exemptions, contact the Sarasota County Property Appraiser’s office at 951-5650 or Manatee County Property Appraiser’s office at 748-8208.

In addition to the tax benefit of homestead, the Florida Constitution also provides protection of the homestead from claims and liabilities of creditors.  This protection does not include obligations specifically related to the property such as real estate taxes and assessments, mortgages, and liens related to improvements on the property.  A homestead must be the primary residence of the owner or the owner’s family, and may include up to 160 acres of contiguous land and improvements outside a municipality and up to one-half acre of contiguous land within a municipality.  In contrast, for the purposes of the tax benefit of the homestead exemption, the size of the homestead is irrelevant.

The protection of the homestead from claims applies when a creditor attempts to satisfy a liability of an individual through the equity in the homestead property.  The status of homestead in this situation is judicially determined by the facts of each case, and homestead provisions within Florida’s Constitution are liberally construed.  In addition to real property, the homestead exemption protects personal property to the value of $1,000.
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