Homestead: More than Just a Property Tax Exemption

BY: Kevin R. Albaum, ESQ.
Clark, Campbell, Lancaster & Munson, P.A.

Most people know that there is a tax break available to them on their home (house, condominium, co-ops apartments, and some mobile home lots also qualify).  The way it works is that a tax exemption can be applied for at the local property appraiser’s office on a person’s home if the person owns and lives in the home that they are trying to obtain the exemption on by January 1 of the year they are trying to claim the exemption.

The tax exemption provides that the first $25,000 of the assessed value is exempt from real property taxes and the third $25,000 of the assessed value is exempt as well.  The tax exemption provision is a nice perk provided by the Florida Constitution (Article VII, Section 6) to Floridians and can easily save a Polk county resident hundreds or possibly over $1,000 per year in property tax owed.  However, the property tax exemption provision is just one of the benefits of owning a homestead property in Florida.

So, what exactly is a homestead?  Article VII of the Florida Constitution further explains the property tax exemption and defines homestead as real estate held by a person who maintains title to the property and maintains permanent residence thereon. Further, you only get one (1) homestead property per individual or family unit. The Florida Constitution has another provision on homestead property (Article X, Section 4) which adds that for creditor protection, homestead property can be up to 160 contiguous acres outside of a municipality or up to (1/2) one-half acre if the residence is located within a municipality and owned by a natural person.  Article X goes on to add restrictions on the devise of a homestead property if you have a spouse or minor child.  For example, if you are married and own a house (in your name only) but your spouse lives in your house, it is likely that you cannot convey the homestead property without your spouse signing the deed as well.

Is my homestead protected from creditors?  Specifically, if your property qualifies for homestead status and fits within the definition under Article X, regardless of the home’s value, it is exempt from the forced sale by any court and protected from judgments of your creditors (except for the payment of tax liens, mechanic’s liens, HOA liens or mortgages).  For example, if you get a new roof put on your house and don’t pay the roofer, you will most likely not have homestead creditor protection against the roofer.  Additionally, if a person files for bankruptcy, a different set of rules for creditors pursuing the homestead property will also apply.

Can I transfer my homestead to my trust or my business?  Many Florida court cases have found a revocable living trust can own a natural person’s homestead property and maintain Article X creditor protections.  However, many other entities and types of trusts cannot own a homestead property and also maintain creditor protection.  For example, you can’t transfer your home to your limited liability company and expect to maintain homestead creditor protections for your home if your limited liability company is sued in the future.

Calling Florida’s homestead laws complex would be a drastic understatement and when questions arise regarding whether or not your home: 1) Qualifies for the Article VII tax exemptions; 2) Qualifies for the Article X creditor exemptions or 3) Has Article X restrictions on whether or not there are restrictions on devising the property, it is always best to speak with an attorney who has experience in this area to look at your specific situation and properly advise you on your home.

Kevin Albaum is an attorney in the Elder Law Practice at Clark, Campbell, Lancaster & Munson, P.A. Questions can be submitted online to thelaw@cclmlaw.com.

Kevin Albaum

Kevin Albaum

Kevin Albaum was born and raised in Tarpon Springs, Florida. He grew up spending a lot of time on the water either boating, fishing, wakeboarding, or jetskiing. Kevin earned his bachelor’s degree at Florida State University where he competed for FSU’s mock trial team across the country. Immediately upon graduation, he enrolled at Stetson University’s College of Law in Gulfport, Florida due to their specialty program in elder law and his passion for that specific field of the law.

Kevin moved to Lakeland, Florida to join Clark, Campbell, Lancaster, and Munson where he practices in the areas of: elder law, guardianship, estate planning, trust administration, and Medicaid. Since moving to Lakeland, he has become involved with the Alzheimer’s Association Walk Committee, EMERGE Lakeland, and VISTE.
Kevin Albaum