Homestead Exemption in Florida
If you own a home in Florida, you can take advantage of the state’s homestead exemption to aid with your estate planning.
Homestead laws in Florida allow up to 0.5 acre for areas inside a municipality and up to 160 acres for areas outside that municipal boundary. But in terms of estate planning, the true advantages of homestead exemption rest with the ability to protect assets from future concerns.
How a Homestead Exemption Works
A homestead exemption for property within the state of Florida allows the property owner to take advantage of tax breaks and/or relief for the real estate property in question, and gain some protection from creditors looking to claim the property to repay outstanding debts owed by the owner, and help avoid any challenges to property asset distributions that occur after the owner has passed away.
Because real estate ownership situations can vary, a Florida homestead exemption requires the owner to apply for the protection for each property owned. For example, a homestead exemption granted to a property in Miami would obviously not apply to a property in Tallahassee.
Florida law has several requirements for granting a homestead exemption.
First, the applicant must have legal ownership or beneficial interest in the property as of January 1 of the requested year. In other words, if you know a living relative intends to leave you a property in their will, you will not be eligible to request a homestead exemption for the property until you have accepted legal ownership of the property. No speculation allowed; don’t apply until you own. Second, the applicant has to identify the property in question as to their permanent residence. Using the Miami/Tallahassee example from earlier, the applicant can claim a homestead exemption only for the property they claim as their permanent residence. So if you live anywhere else but the property in question, you should make plans to move before applying for the exemption. Finally, the homestead exemption application has to be filed with the county’s property appraiser between January 1 and March 1. Just like filing your tax returns, there’s a window for the application process.
One of the chief concerns people have when creating estate plans rests with insuring the assets get to the correct beneficiaries without any problem. Estate plans offer a variety of methods to ensure asset delivery, from wills to revocable trusts.
However, the probate process and any outstanding debts can limit how much of the estate ends up with the beneficiaries. But with a homestead exemption in place, you can ensure the creditors will have no legal authority to make force the property be sold to settle outstanding debt they may be owed.
Just as trusts can offer asset protection, a homestead exemption can afford a certain level of legal protection that helps ensure the assets end up with the intended beneficiaries without the threat of seizure. However, any outstanding fees associated with property ownership, such as outstanding homeowner association dues, will take precedent over the homestead exemption. As such, check with the property appraiser and any homeowner entity to verify the property status prior to taking ownership of the property.
If you need or want to learn more about how homestead exemption can be used for your estate plan, contact the Nici Law Firm today.