In Florida, a home that is protected by homestead is considered a person’s castle, impermeable from most threats. The Florida homestead exemption has three distinct components: creditor protection, real property tax exemptions and limitation on devise and descent. Most individuals merely know the exemption for its creditor protection, but the law expands well beyond that. Here are some tips for protecting your assets through the homestead exemption.
Understand the qualifications for the Florida Homestead Exemption. The Florida homestead exemption is one of the most favorable in the country, if not the best. Accordingly, individuals and their properties must both qualify for the exemption. Specifically, an individual must be a resident of Florida and living in the state for six or more months out of the year. This reaches most “snow birds,” who travel from northern states to Florida for the winter. The property must also qualify. It must be a primary residence and located on no more than one-half of an acre within a municipality or 160 acres outside of a municipality. The homestead exemption must also be filed in a timely manner, between January 1 and March 1 of the year in which the homestead should apply. Finally, if you move to a new home, you must apply to “port” a homestead from a prior home to a new home (also known as portability).
Recognize the unlimited creditor protection inherent in Florida homestead laws. Article X, Section 4 of the Florida Constitution provides that a homestead property avails itself from the protections of prevention of a forced sale to satisfy the judgment of creditors. The protection in Florida is not limited by the value of the home, unlike other states. However, there are four exceptions: tax liens due to property taxes owed, specific liens due to mortgages and other voluntary instruments, mechanics liens, and/or claims of any creditor who has a judgment pre-dating the establishment of the homestead. The last exception is one of the reasons why timely filing and portability of the homestead exemption is extremely important.
Utilize the property tax exemptions inherent in Florida homestead laws. Once a homestead is established on a property, certain tax exemptions become available to the property owner. First, there is the general homestead tax exemption applied to the first $50,000 of the value of the home. For instance, if a home is worth $100,000, the property owner will pay taxes on $50,000 of that value. Other tax exemptions available for homestead properties include the exemption for widows or widowers, low-income senior citizens, individuals on disability, deployed military owners, veterans and surviving spouses of first responders who have died in the line of duty.
Understand the devise and descent protections and limitations of Florida homestead. Establishing homestead on a property causes certain limitations to apply as to who can succeed to the property upon an individual’s death. This overlaps with the property’s creditor protections. Specifically, an owner may not devise or leave their homestead by will, trust or otherwise if survived by a spouse or minor child except to that surviving spouse and/or minor children. On the other hand, if there are no minor children or spouse, then the homestead may be transferred by will, trust or otherwise to anyone. As a practical matter, individuals should still consider transferring their homestead property to a revocable trust to avoid probate; otherwise, a summary administration and a petition to determine homestead with the court will have to be filed to effect the transfer.
Hillel L. Presser, MBA, is an attorney with the Presser Law Firm.