Decoding Florida’s Homestead Exemption

Florida has a reputation as a very debtor and taxpayer-friendly state, and one of the main reasons why is its homestead exemption. A homestead exemption can shield the homeowner from heavy property taxes, as well as protecting it from creditors and probate in the event of a bankruptcy or a death in the family. However, the regulations surrounding the exemption and how much it will cover can be extremely complex. Contacting a knowledgeable estate planning attorney can help to simplify matters.

Why Seek An Exemption?

The primary purpose of the homestead exemption is to save on taxes, particularly property taxes. However, a ‘homesteaded’ property is also immune from unsecured creditors’ claims, which can make a difference in a bankruptcy or probate case. As long as a property qualifies under the relevant law as a homestead, its owners are entitled to a host of benefits that both lower their tax bill and protect their interests. Perhaps the most commonly known is qualifying under the Save Our Homes Act, which limits any rise in your home’s assessed value to no more than 3 percent (or the price change in the Consumer Price Index, whichever is lower).

There are specific eligibility requirements that both the homeowner and the property must meet, and certain conditions that must be avoided. These include:

• The property must be your primary residence, and you may not have rented it out for more than 30 days per calendar year for the past 2 years (if you have, it constitutes abandonment of the homestead);
• You must not have an exemption in any other state;
• Only “natural persons” and revocable trusts may qualify;
• You must occupy the homestead (or one of your dependents must) before January 1 of the year in which you are applying for the exemption – for example, if you want to apply for a 2021 exemption, you or a dependent must have occupied the home sometime in 2020; and
• You must be a U.S. citizen or a legal U.S. and Florida resident.

Potential Estate Planning Problems

While a homestead exemption is incredibly useful for many different Florida residents, it can sometimes cause problems in terms of estate planning. A homestead exemption may interfere with your plan as to how to disburse your assets upon your passing. For example, Florida law holds that a homestead may not be devised to anyone other than your minor children (if there are any) or your spouse. If you had other plans, you may have to choose between them and the exemption.

It is possible for a spouse to waive homestead rights, after which one can devise the homestead in any way they choose as long as there are no minor children. However, if they do not, or if the homestead is conveyed illegally, the surviving spouse will receive a life estate, with the actual homestead being passed down to the owner’s surviving children per stirpes (that is, according to age, though the share of any predeceased child is distributed among their siblings). Either way, consulting an experienced estate planning attorney can help to simplify what is often a complex process.

Call A Naples Estate Planning Attorney

If you have questions, concerns or just want to set up a complimentary consultation to discuss your personal legal issues in a confidential setting, contact James R. Nici, the Managing Partner of Nici Law Firm, a Naples estate planning attorney with almost 30 years of legal experience.  This may be the first step toward ensuring all is how you want it to be going forward. Contact our offices today via our website, or on the telephone at 239-449-6150, to schedule your complimentary consultation.

Resources:

flsenate.gov/Laws/Statutes/2020/0196.061

flsenate.gov/Laws/Statutes/2019/193.155