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It's The Law: Homestead Law Is Complicated

Question: I just moved to Florida and my friends tell me Florida homestead is a good thing. Can you explain?

Answer: Florida's Constitution and statutes provide complicated protections and benefits for homestead and favorable treatment for ad valorem property taxation.

The Constitution defines homestead as the permanent residence of the owner or another legally or naturally dependent upon the owner. The first $25,000 of assessed value of homestead property is exempt from property taxes. The next $25,000 of assessed value is taxable, but the assessed value between $50,000 and $75,000 is exempt from property taxes, other than school district levies.

The tax break is not automatic. By statute, anyone entitled to homestead benefit on January 1, must file an application for exemption with the County Property Appraiser on or before March 1 of that year. Failure to timely make application is a waiver of the exemption privilege for that year. Once homestead status is granted by the Property Appraiser, renewal is easy. The Property Appraiser sends the owner a renewal application in each succeeding year. The form is prescribed by the Florida Department of Revenue, but is short and easy to complete. A County may, at the request of the Property Appraiser and by a majority vote of its governing body, waive the annual application requirement for those years after an initial application is made and the exemption granted.

The key to homestead is proving permanent residency. Florida statutes make the following factors relevant.

1. A formal declaration of domicile by the applicant recorded in the Public Records;

2. Location where the applicant's dependent children are registered for school.

3. The applicant's place of employment;

4. Evidence that previous permanent residency was terminated.

5. Voter registration.

6. Valid Florida driver's license.

7. Florida license tag on any motor vehicle.

8. Address listed on federal income tax returns.

9. Location where the applicant's bank statements are registered.

10. Proof of payment for utilities at the property for which permanent residency is claimed.

Homestead not only qualifies for a tax break, but also is protected from creditor claims. Article X, Section 4 of Florida's Constitution exempts homestead from forced sale. No judgment, decree or execution is a lien against homestead, except for the payment of taxes and assessments, or obligations contracted for purchase, improvement or repair of the property. This exemption from creditor claims protects homestead within a city up to ½ acre and homestead outside of a city up to 160 acres. It also protects personal property up to $1,000.00.

The Constitutional and statutory protections are intended to keep families from becoming wards of the State. Consequently, the protection from creditors continues when the homestead is inherited by a spouse, children or family member that falls within the classification of an heir under Florida statutes.

The protection has strings attached. The Constitution prohibits giving homestead through a will or trust (known as a devise) if the owner is survived by spouse or minor child, except the homestead can be devised to the owner's spouse if there are no minor children. The constitution also requires joinder of a spouse for the owner to sell, convey, mortgage or make a gift of homestead property.

The statutes make homestead even more complicated. If the owner improperly attempts to devise homestead other than is authorized by statute in the constitution or dies without a will, homestead passes to the owner's heirs like any other property. That means it follows Florida's intestate succession statute. But, if the decedent is survived by a spouse and one or more descendants, the surviving spouse takes ownership of the homestead for his or her lifetime and when the spouse dies the remainder goes to the original owner's descendants.

To make it more complicated, the legislature amended the homestead statute in 2010. The statute now allows a surviving spouse to elect an undivided half interest in the homestead with the other half interest owned by the descendants of the decedent. Election of that option allows the surviving spouse to force sale of the property through a partition action so the surviving spouse can liquidate the real estate interest, even if the descendents do not cooperate.

Homestead is a complicated area. It has many benefits, but also burdens. When dealing with homestead in any fashion, Floridians are well advised to retain and experienced attorney.

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