To Homestead or Not to Homestead?

September 23, 2020

Welcome to Florida! Along with the white sand beaches, turquoise waters, and year-round sunshine, Florida has many other hidden gems. These gems are legal benefits that only Florida residents get to enjoy. Many people don’t even know about all the perks that come with permanently moving to Florida. Our job as estate planning lawyers is to give you the full scoop.

Florida residents are fortunate to have one of the most generous homestead laws that protect our primary residence from claims by creditors. A type of “built-in” asset protection that comes with your home. These laws prevent creditors from getting the right to forcibly sell your home to pay themselves. Creditors can be anyone ranging from a credit card company, former business partner, and in some cases, an ex-spouse during a divorce.

Some other states have similar laws but not like Florida. Florida offers an unlimited amount of protection in value for the home, even when the home is one that is uber opulent and worth millions of dollars. However, although most creditors cannot touch your Florida homestead, keep in mind that these rules do not apply to property taxes, mortgage payments, construction or mechanic liens, or special assessments. 

How Do You Qualify for Such Homestead Protection?

  • The Florida Constitution provides protections for the person who claims a property as their principle place of residence.
  • The homestead act protects up to 160 acres of property outside of a municipality and up to ½ acres within a municipality.
  • In order to quality for Florida homestead, you must be a US citizen and a permanent resident. Non-citizens can claim the Florida homestead exemption only if they have children who were born in the US and who live in the home and are dependent on the owner of the homestead.
  • In order to obtain homestead in Florida, the property owner must have owned the home as of January 1st of the year they are applying for. Then you must file an application (either online or by mail) with the County you live in. There are different timelines for the application based on the different counties in Florida.
  • When submitting the homestead application, you will be asked to provide proof of residency such as your driver’s license, license plate of your car, voter registration card, income tax returns showing you file income taxes in Florida, etc.
  • These exemptions are only available to an individual’s primary home; it does not apply to homes owned by a business entity, rental properties, second homes, or to homeowners claiming permanent residency-based exemptions in other states. 

What Benefits Exactly Does the Homestead Exemption Provide?

  • As a permanent resident in Florida, you can get huge savings in property taxes. The exemption allows for a Florida resident to reduce the assessed value of their homestead to $50,000. The property tax assessment determines the market value of a property. Each parcel of real property has a just value, which is the property’s market value. It also has a taxable value, which is the assessed value minus the exemptions. This value is what the tax collector uses to calculate the taxed due on the real property each year. 
  • Homestead also protects your spouse and minor children from losing the home. For example, there are restrictions on how a homestead can be devised to heirs. Under Article X, section 4 of the Florida Constitution, homestead cannot be devised (given away to someone else) if the homeowner is survived by a spouse or minor children. However, the homestead may be devised by the owner’s spouse if there are no minor children. Minor children have the first priority in receiving the homestead upon the death of the owner, even if there is a spouse. As long as the deceased homeowner does not leave the property to someone other than minor children or spouse, or a qualifying heir, the homeowner will continue to be protected from creditor claims after their death. 
  • You can put your home into a Revocable (Living) Trust and still qualify for homestead protection. Putting your home in a Trust allows your loved ones to inherit the property after your death without the need for a court supervised probate process. Upon your passing, the property passes to your beneficiaries as listed in your Trust. Note that the Trust must have proper homestead language to ensure this benefit.
  • Waiving of spousal rights. This may or may not be a benefit, but it is a good option to have and imperative that homeowners understand the nitty gritty involved. In light of recent case law, Fla. Stat. § 732.7025 (2018) was enacted to create a safe harbor, so that a spouse can waive their right to the homestead property by way of a Quit-Claim Deed if the Deed has the following or similar waiver language: “By executing or joining this deed, I intend to waive homestead rights that would otherwise prevent my spouse from devising the homestead property described in this deed to someone other than me.” Huh? Yes, we understand. Essentially, when a spouse signs a Deed containing this language, it means they are giving up any rights to the homestead they live in. This can be a benefit in cases of 2nd or 3rd marriages, where the new spouse has simply moved into the home that was already owned by one spouse. Additionally, in the fast-paced world of real estate closings, homestead issues can cause unwelcome delays. Having adopted a waiver of constitutional homestead protections within a deed, will hopefully provide more certainty for real estate practitioners and title companies.

If you have recently moved to Florida and are considering whether or not the homestead exemptions is right for you, consult an estate planning attorney. Homestead is a wonderful thing but can yield unwanted consequences if not fully understood. Our experienced estate planning attorneys will explain all the benefits associated with becoming a Florida resident (other than the sunshine). Contact OC Estate and Elder Law at (954) 251-0332 or info@ocestatelawyers.comto get started on your free consultation. Our attorneys are fluent in English, Spanish, and Russian.