FLORIDA HOMESTEAD EXEMPTION

Florida homestead status is an important concept which appears in three different sections of the Florida State Constitution.

Florida homestead status is an important concept which appears in three different sections of the Florida State Constitution. First, obtaining homestead status on your property saves the homeowner on their real estate tax assessments. Secondly, obtaining homestead status caps the amount a homeowner's property can be reassessed annually. Thirdly, homestead status protects a homeowner with asset protection for his home against third party creditors.

Article VII, Section 6 of the State Constitution extends homestead protection to "every 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..." Accordingly, to qualify you must own the real estate and make it you principle residence for yourself. You can own it individually or jointly or as the beneficiary of a trust holding the title.

Tax assessment savings

Once homestead is properly declared, Florida law provides the homeowner a $50,000.00 exemption from real estate tax assessment. For example, if a home is assessed at a market value of $250,000.00 the first $50,000.00 of this value is exempt from taxation thereby computing the property taxes on only $200,000.00. With an annual tax milage rate of approximately 1.5%, this exemption equates to an actual savings of approximately$750.00 annually.

Assessment cap savings

Secondly, obtaining homestead status will cap the amount a homeowner's property can be reassessed annually to 3% or to the percentage change in the Urban Consumer Index, which ever is lower. Annually properties throughout Collier County are reappraised to reflect the actual current market value. In the past this gas led to dramatic increases in certain years, however, due to the recent TRIM amendment to the Florida Constitution, the property owners are beginning to receive additional savings by applying for homestead exemption.

Creditor protection

Finally, the Florida Constitution provides homestead property with a shield of protection against third party creditors. Under Florida law, homestead property is immune from any judgments, liens or claims of third parties. The only exemption is if a property owner affirmatively pledges his or her homestead property as security such as a mortgage or improving the property and thereby subjecting the property to the construction lien law. Even after a property is sold, if there are judgment liens against the property owner provided the homestead proceeds are reinvested in another homestead property, they are again immune from third party claims.

How to apply

To apply for homestead exemption the owner of the property must appear personally at the County Property Appraisers office and complete a Form DR-501 application for a tax exemption.

At the time of application it will be necessary to produce a copy of:

  1. Recorded deed reflecting property owner, or alternatively, a tax bill reflecting the legal description and owner's name;

  2. Florida automobile registration;

  3. 3) Collier County voter registration card;

  4. Social Security number

Other forms of ownership

If property is held in a trust, the beneficiary can qualify for homestead if it is their principle residence and a copy of the trust document is produced reflecting that he or she is the beneficiary. In cases where there are multiple owners holding title and some may be out of state residents, the person who declares Florida their residence and applies for homestead is entitled to a proportionate share of the $25,000.00 exemption in proportion to their ownership interest. Additional exemptions may be obtained for widows or widowers, permanent disability or legal blindness as attested by physicians. Only one property can be declared homestead property and it is a criminal offense to file more than one application.

Deadline for filing

To be entitled to a homestead exemption for assessment purposes for the current year you must be a record titleholder as of January 1st, however, an application for homestead exemption can be applied anytime after a new residence is acquired. The deadline for any current yea application is March 1st. If an application is made after March 1st, the exemption is lost for tax purposes for the balance of the year but will be applied to take effect for the following year. Once homestead is applied for, it will roll over automatically every year until you vacate the property as your primary residence.

ABOUT THE AUTHOR

Ronald S. Webster has practiced Law in Collier County with a principal office on Marco Island since 1986.
Contact Ron