The Florida Constitution provides this tax-saving exemption on the first and third $25,000 of the assessed value of an owner/occupied residence. As the Florida Supreme Court noted in Snyder v. Davis, 699 So. Once Abby’s creditors have her interest in whiteacre, they become co-owners with Ben and Chuck, and they can force a sale of the property.41 Until Abby qualifies for the homestead creditor exemption in whiteacre, Ben and Chuck will always be at risk. X, §4(c) provides that: (c) The homestead shall not be subject to devise if the owner is survived by spouse or minor child, except the homestead may be devised to the owner’s spouse if there be no minor child. Therefore, a co-owner is not free to devise his or her transfer restricted homestead when he or she has a surviving spouse or minor child. Therefore, life estates and remainder interests fall into the same category as tenants in common property. AcreValue helps you locate parcels, property lines, and ownership information for land online, eliminating the need for plat books. However, if at least one co-owner does not qualify for the homestead creditor exemption, the property becomes subject to that co-owner’s creditors. Chuck can only claim $20,000 of the $25,000 exemption because he cannot exceed the value of his proportionate interest. This exemption does not apply to businesses, rental property, second homes, homeowners claiming permanent residency-based exemptions or tax credits in other states, or homes with owners that do not claim Florida as their primary residence. 205 (Bankr. 1972); see also Chapman v. Chapman, 526 So. 852 (Bankr. In order to answer this question, there are two issues that need to be addressed: 1) whether a person with a fractional ownership can claim the homestead creditor exemption, and 2) which of the co-owners qualify for the homestead creditor exemption, and which, if any, do not. A tax exemption is an important benefit that offers Florida resident considerable savings on their property tax bill. 2d 429 (Fla. 3d D.C.A. The second $25,000 exemption applies to the value between $50,000 - … Florida residents can take advantage of several homestead exemption categories to reduce their property taxes. 1997). How can I verify ownership? . After which, Abby, Ben, and Chuck will be responsible for the ad valorem taxes assessed on blackacre at a value of $40,000. M.D. As an example, assume that Abby, Ben, and Chuck own whiteacre as tenants in common each with a one-third interest. §196.031(1)(a) (2011) (“If only one of the owners of an estate held by the entireties or held jointly with the right of survivorship resides on the property, that owner is allowed an exemption up to the assessed valuation of $25,000 on the residence and contiguous real property.”). Boca Raton, FL 33432 41 Ben and Chuck would each receive one-third of the net proceeds from the forced sale. The first $25,000 of value is entirely exempt. 2d 19 (Fla. 3d D.C.A. 2d 326, 327 (Fla. 1st D.C.A. If another form DR-501. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';fnames[1]='FNAME';ftypes[1]='text';fnames[2]='LNAME';ftypes[2]='text';fnames[3]='ADDRESS';ftypes[3]='address';fnames[4]='PHONE';ftypes[4]='phone';}(jQuery));var $mcj = jQuery.noConflict(true); https://www.allpropertytitle.com/wp-content/uploads/2018/01/photodune-14345063-front-exterior-m.jpg, https://www.allpropertytitle.com/wp-content/uploads/2018/01/All-Property-Title-1-300x83.png, THE FLORIDA HOMESTEAD EXEMPTION ─ GENERALLY, Deadlines matter with financing contingencies under the new FAR/BAR. 2d 707, 709-10 (Fla. 5th D.C.A. 2d 785, 785 n.1 (Fla. 1978). Alachua County Property Appraiser 12 S.E. art. Florida offers many benefits to property owners who qualify for homestead. Individuals only are eligible for homestead exemption; corporations or business entities do not qualify. Thus, if Chuck is in debt, Chuck’s creditors can go after Chuck’s personal assets, but his creditors cannot take his interest in or attach a lien to his homestead, whiteacre. §689.15 (2011) (unless it is a married couple acquiring property). • Devise and Descent, Joint Tenants with Right of Survivorship — The rules regarding devise and descent do not apply to transfer restricted homestead owned as joint tenants with right of survivorship, because, similar to property owned as tenants by the entirety, at death the property passes automatically to the other joint owners.57 Therefore, co-owners who want to preserve the transfer restricted homestead for their spouse or children should be cautious about owning property as joint tenants with right of survivorship. 2d 375, 377 (Fla. 1978). Chuck’s proportionate interest in blackacre is $30,000 ($90,000 X 1/3). b. • Life Estates and Remainder Interests — Individuals may also take title to property in a manner that divides ownership into present and future interests. 17 Excluding the application of the $25,000 homestead tax exemption. See Beal Bank, SSB v. Almand and Associates, 780 So. Individuals who qualify for homestead can enjoy certain tax benefits. © 2021 The Florida Bar. All legal Florida residents are eligible for a Homestead Exemption on their homes, condominiums, co-op apartments and certain mobile home lots. Three percent (3%) of the assessment for the prior year. §196.031 specifically permits co-owners of property held as tenants by the entirety or as joint tenants with right of survivorship to use the entire $25,000 tax exemption and does not limit to an owner’s proportionate interest. art. Thus, the life estate holder has 100 percent of the current possessory interest permitting the life estate holder to use the entire exemption amount (provided, of course, it does not exceed the value of the property).11 The co-owner with the remainder interest would not be able to qualify for any homestead tax exemptions.12. §193.155(3)(a) (2011). This year, whiteacre’s value has doubled (100 percent value increase); however, because Chuck qualified for homestead and still qualifies for homestead, the assessed value for ad valorem tax purposes cannot exceed a three percent increase. State law allows you to transfer your Save Our Homes benefit to a new home if you claimed the Homestead Exemption in either of the three preceding tax years. Use our Tax Search option. If parents and their child title the property as tenants in common, they need to keep in mind that the child’s ownership percentage will determine how much of the $25,000 tax exemption may be applied and how much of the property value will receive the SOH tax cap. Filing for a Homestead Exemption. $61,800 + $60,000 = $121,800 assessed value. To illustrate this, assume that Abby, Ben, and Chuck own blackacre as tenants in common, each with a 1/3 interest: 1) Chuck qualifies for the homestead tax exemption and the SOH tax cap. The exact property tax levied depends on the county in Florida the property is located in. Fla. Const. 1988) (held that the “life tenant(s) may not partition the remainder,” and explained that remaindermen “are not joint tenants, tenants in common, or coparceners.” Therefore, a remainderman would not be able to partition under the statute.). 24 For a detailed discussion outlining the specific requirements of each condition, see Barry Nelson & Kevin Packman, Florida’s Unlimited Homestead Exemption Does Have Some Limits, Part I, 77 Fla. B. J. ), modified, Tullis v. Tullis, 360 So. The percent change in the Consumer Price Index for all urban consumers, U.S. City Average, all items 1967=100, or successor reports for the preceding calendar year as initially reported by the United States Department of Labor, Bureau of Labor Statistics. Conversely, co-owners of property titled as joint tenants with right of survivorship have a “unity of interest,” meaning their interests are identical in the property. Parents who are concerned with giving their child a greater property interest than the child is actually paying for can consider using a promissory note signed by their child (and recorded) to protect parents’ interest and still allow their child to take advantage of the homestead tax benefits. §193.155(3)(a) (2011), such as by operation of law under Fla. Stat. 40 Once the creditor acquires a co-owner’s interest, if it was titled as joint tenants with right of survivorship that breaks one of the required unities resulting in ownership as tenants in common between the creditor and remaining co-owners (whose interest if multiple would still be as joint tenants with right of survivorship). 2d 727 (Fla. 1969), held that remainder interests, including vested remainders, were not able to qualify for the homestead creditor exemption, even if he or she lived on the property, because there was no “present right to possession.”46 Thus, a life tenant can qualify for the homestead creditor exemption with a life estate, but the Florida Supreme Court has determined that a remainderman cannot qualify with a remainder interest. However, anytime there is a “change of ownership,”15 the property must be assessed at just value the following January.16 In addressing the application of the SOH tax cap to co-owned property, F.S. art. When at least one co-owner does not qualify for the homestead creditor exemption, a potential problem exists. 12 While a couple Florida bankruptcy court cases have held that a remainder interest holder may be entitled to creditor protection, the argument does not apply to the homestead tax exemptions, and this is because homestead creditor protection and homestead tax exemptions are separate and distinct. 23 Snyder v. Davis, 699 So. Fla. Const. The exemption removes $25,000 off the assessed value of an owner-occupied residence and could provide up to another $25,000 additional exemption off assessed value over $50,000. Ben and Chuck now have to worry about Abby’s creditors. to 5:30p.m. When all co-owners qualify for the homestead creditor exemption, the home will be exempt from forced sale and liens. THE HOMESTEAD EXEMPTION In the state of Florida, a $25,000 exemption is applied to the first $50,000 of your property’s assessed value if your property is your permanent residence and you owned the property on January 1 of the tax year. Like tenants by the entirety and joint tenants with right of survivorship, at death the interest passes automatically, and in the case of a life estate, to the remainderman. You may file a new application for homestead exemption no later than March 1 of the year for which the exemption applies. • Bringing the Tax Exemptions Together — Whether property is titled as tenants by the entirety, joint tenants with right of survivorship, tenants in common, or a life estate, the co-owner who can qualify for the homestead tax exemption21 can also qualify to use some, if not all, of the $25,000 homestead tax exemption and Save Our Homes tax cap. 1/3 X $90,000 (original value) = $30,000 X 3% (SOH tax cap) = $30,900 assessed value. 3 Fla. Const. 57 Fla. Stat. Consequently, how does co-ownership of property impact the three kinds of homestead? art. See generally Richard Franklin & Roi Baugher, Protecting and Preserving the Save Our Homes Cap, 77 Fla. B.J. 2002) (the constitution “does not designate how title to the property is to be held and it does not limit the estate that must be owned, i.e., fee simple, life estate, or some lesser interest”); see also Callava v. Feinbers, 864 So. Provided all three qualify for the homestead creditor exemption, whiteacre will be exempt from the individual creditors of Abby, Ben, and Chuck. Florida has been a popular choice to take up residency for many individuals because of the expansive creditor protection afforded by the homestead laws in this state.22 This expansive protection stems from the purpose of homestead: to preserve the family home.23 The protection of homestead property from the forced sale by the creditors of the owner is based on the provisions of Fla. Const. The AcreValue Lee County, FL plat map, sourced from the Lee County, FL tax assessor, indicates the property boundaries for each parcel of land, with information about the landowner, the parcel number, and the total acres. • Chuck’s interest qualifies for the homestead tax exemption; therefore, his interest receives the SOH tax cap and cannot be increased by more than three percent. However, you can apply for a 2011 homestead exemption by going to the Property Appraiser’s office and completing an exemption application no later than March 1, 2011. 2) Abby and Ben qualify for the homestead tax exemption and SOH tax cap. 42 Sauls v. Crosby, 258 So. VII, §6 states that “[e]very person who has the legal or equitable title to real estate and maintains thereon the permanent residence of the owner, or another legally or naturally dependent upon the owner, shall be exempt from taxation thereon. Instead, the co-owner’s interest in the transfer restricted homestead property must pass to his or her surviving spouse and/or minor child(ren) as designated by law. §196.031 explains how the $25,000 exemption applies to co-owners, stating that the exemption “may be apportioned among such of the owners as shall reside thereon, as their respective interest shall appear.”. 1995) (“A unique aspect of a tenancy by the entirety is that each spouse is ‘seized of the whole or the entirety, and not of a share, moiety, or divisible part.’” (quoting Bailey v. Smith, 103 So. M.D. Const. This assessment shall change only as provided in this subsection. A “change of ownership” is defined as “any sale, foreclosure, or transfer of legal title or beneficial title in equity to any person, except as provided in this subsection.” Thus, obviously the SOHA cap is lost when a property is sold to a completely new owner. weekdays . Chuck’s proportionate interest in blackacre is $20,000 ($60,000 X 1/3). Florida Law entitles every person who has legal or equitable title to real estate and maintains it as his/her permanent residence, to apply and receive up to a $50,000 homestead property exemption. ‘To inculcate in its members the principles of duty and service to the public, to improve the administration of justice, and to advance the science of jurisprudence.’ Benefit to Homestead Exemption Florida law allows up to $50,000 to be deducted from the assessed value of a primary / permanent residence. 919, 939-43 (1988). When someone owns property and makes it his or her permanent residence or the permanent residence of his or her dependent, the property owner may be eligible to receive a homestead exemption up to $50,000. 38 Tullis v. Tullis, 360 So. ’ We believe that this refers to homestead as it is otherwise used in section 4. Phone (561) 750-7544 A chain is only as strong as its weakest link, and this holds true for property owned as tenants in common or as joint tenants with right of survivorship. As for life estates and remainder interests, F.S. Joseph M. Percopo practices law in central Florida. 6 $60,000 (assessed value) minus $25,000 (tax exemption) = $35,000 taxable value. 47 Fla. Stat. $120,000 + $30,900 = $150,900 assessed value. 2008). 4 Richard Franklin and Roi Baugher, Protecting and Preserving the Save Our Homes Cap, 77 Fla. B.J. 2d 1286, 1285 (Fla. 4th D.C.A. Therefore, when a property owner qualifies for the homestead tax exemption under §6,14 the most his or her property value can increase for ad valorem tax purposes is three percent a year. 27 First Nat’l Bank of Leesburg v. Hector Supply Co. , 254 So. 2d 1018 (Fla. 2001) (demonstrating the far-reaching creditor protection). Florida law defines a change of ownership as any sale, foreclosure, or transfer of legal title or beneficial title in equity to any person. When applying for the Homestead Exemption, you will need to provide several items listed below that serve as evidence of property ownership and Florida permanent residence. Florida statutes set firm requirements for persons receiving the valuable homestead exemption. Pursuant to the Florida Constitution, in order to qualify for the homestead creditor exemption, three conditions must be satisfied: 1) acreage limitations, 2) residency requirements, and 3) ownership requirements.24 Provided all three of these conditions are satisfied, creditors of the person claiming the homestead creditor exemption will not be able to force sale of or place a lien on the homestead property.25 This article now examines how co-ownership of property affects the homestead creditor protection. 34, 34 (Oct. 2003). Also, a loss or removal of homestead will trigger a reassessment and removal of the SOH benefit. 2d 981 (Fla. 4th D.C.A. §732.401(1) further states that “[i]f not devised as authorized by law and the constitution, the homestead shall descend in the same manner as other intestate property; but if the decedent is survived by a spouse and one or more descendants, the surviving spouse shall take a life estate in the homestead, with a vested remainder to the lineal descendants in being at the time of the decedent’s death per stirpes.” However, the spouse may also make an election “to take an undivided one-half interest in the homestead as tenants in common, with the remaining one-half interest vesting in the decedent’s descendants in being at the time of the decedent’s death, per stirpes,” instead of taking the life estate.50, When an individual has no spouse or minor children, he or she is free to devise the homestead property anyway he or she pleases.51 Conversely, when an individual is survived either by a spouse or minor child(ren), then the property is not subject to devise and will pass as intestate property (meaning that the sole surviving spouse will become the sole owner52 if there are no descendants, or the surviving minor child(ren) will become the sole owner if there is no surviving spouse).53. 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