Homestead property in Florida enjoys protection against creditor claims and receives preferential property tax treatment. Florida homestead is also burdened with restrictions as to when and how it can be transferred, both during life and at death. Here is a brief summary of some of the benefits and burdens.
Benefit: Protection Against Creditors
The Florida Constitution provides protections for homestead property in Florida, but must be dealt with carefully from an estate planning perspective, so that the protections are maximized and restrictions recognized. First, Article X, Section 4 of the Florida Constitution extends protection from forced sale, with few exceptions, to a homestead property ½ acre or less for property located within a municipality and up to 160 acres for homestead property located outside of a municipality. The exceptions to the creditor protection afforded under the Florida Constitution include non-payment of property taxes, mortgages on the property, if you have someone come onto the property and make improvements and fail to pay him, or the IRS.
Benefit: Property Tax Relief
In addition, the Florida Constitution permits up to a $50,000.00 property tax exemption for a homestead property. Other property tax exemptions are available for widows, property owners with a personal disability or blind disability, and for disabled veterans (correlates to the percentage of the service-connected disability rating if certain requirements are met). Seniors that are 65 years and older with limited income may also be eligible for an additional exemption of up to $50,000.00 depending on the ordinance adopted by the board of county commissioners or the governing authority of any municipality in which the senior resides.
Amendment 10 of the Florida Constitution, known as the “Save Our Homes” cap, limits annual assessment values on the homestead property for ad valorem property tax purposes to no more than 3%, even if the fair market value of the property has significantly increased. In 2008, an amendment to the Florida Constitution was approved and permits the transfer of the “Save Our Homes” cap to a new homestead upon application and provided the property owner had a homestead exemption in 2007 or later. It is important to consider the “Save Our Homes” cap benefit when considering changing ownership interests in homestead property, including adding family members to a deed, as this could result in a partial loss of this benefit resulting in higher property taxes.
Burden: Restrictions on Transfer
Lastly, restrictions on the devise of the homestead property must be taken into account when developing an estate plan. The Florida Constitution states that the homestead may not be devised if the property owner is survived by a spouse or minor child. If the homeowner is survived by a spouse and the homestead property is not validly devised, the surviving spouse has 2 options: (1) he or she can choose to take a life estate interest in the property with the remainder going to the lineal descendants of the homeowner; or (2) he or she can elect to take a 50% interest as tenants in common with the lineal descendants of the deceased spouse. If the surviving spouse chooses to be a life tenant of the property, he or she is responsible for the taxes and upkeep of the property, which some widows may be unable to afford. By electing to take the property as a tenant in common, the children of the deceased spouse share in the property maintenance and expenses, and the surviving spouse can force the sale of the property, if necessary, and receive 50% of the proceeds from the sale.
If you have questions about your Florida homestead property, please contact us or call the office to schedule a complimentary phone consultation with one of our knowledgeable attorneys at 813-438-8503.