Common Property Tax Exemptions
The most common available exemptions for Florida homeowners include the following:
- Homestead exemptions for up to $50,000 are available to Florida homeowners on their primary residence. The first $25,000 of this exemption applies to all property taxes and school taxes. The second $25,000 applies to assessed value between $50,000 and $75,000 and to nonschool taxes.
- Widow(er)’s exemptions of $500 are available to non-remarried widows and widowers. In addition, surviving spouses of first responders who died in the line of duty are eligible for a total exemption on homestead property.
- Senior citizen’s exemptions of up to $50,000 are available in certain counties and cities to residents aged 65 and older whose income does not exceed the income limitation. Additional homestead exemptions are available to seniors whose homes are valued at $250,000, who have lived in their home for at least 25 years, and who have income that does not exceed the income limitation.
Special categories of exemptions are available to homeowners in Florida who are veterans of the U.S. military and/or were disabled while in the military service. These exemptions include the following:
- Veteran’s disability exemptions of $5,000 are available to veterans who have at least a 10-percent service-connected disability, as rated by Department of Veterans Affairs. This is not limited to homestead property. A surviving spouse may be eligible to carry over the exemption.
- Combat injury discounts are available to residents age 65 and older who were Florida residents when entering the service were honorably discharged, and have a combat-related disability. This discount is given as a percentage discount equal to the veteran’s service-connected disability rating.
- Total veteran’s disability exemptions are available to honorably discharged veterans with a service-connected total and permanent disability. This exemption provides total and complete tax relief for all property tax on the veteran’s primary residence as a token of Florida's gratitude for their service. A similar exemption is available to disabled veterans who must use wheelchairs. Surviving spouses of veterans may be able to carry over this exemption.
- Active duty and veterans who use their homes as their primary residence or rent the homestead property while serving elsewhere are eligible for the homestead exemption.
- Active duty and veterans of the military, Coast Guard, reserves, and Florida National Guard deployed outside the United States in the previous calendar year may get a percentage exemption on the home's taxable value.
Florida Homestead Exemption and Requirements (consult your own attorney please)
When transferring property by deed, it is important to determine whether the property is a Florida homestead. Property that qualifies as Florida homestead has important benefits, including asset protection, family protection, and property tax savings. And if the homeowner is married, he or she cannot transfer the homestead without the signature of his or her spouse (even if the spouse is not listed on the property).
This article discusses the benefits of Florida homestead law and the requirements for qualifying for Florida homestead protection. If you are ready to create your own deed to Florida real estate, our deed creation software can help you create your own deed in minutes.
Florida Homestead: Asset Protection Benefits
Florida has generous homestead laws that protect property owners from claims by creditors. These laws protect qualifying Florida homeowners from having their homes forcibly sold to pay creditors. Although other states have similar laws, several features of Florida’s homestead laws provide extra asset protection for homeowners:
- Unlimited Value – Florida’s homestead laws protect an unlimited amount of value in a home. Even luxury homes worth millions of dollars are fully protected from creditors under Florida homestead law.
- No Waiting Period – There is no waiting period for Florida homestead protection. On the day that a homeowner occupies the property intending to make it a Florida homestead, the home becomes protected from creditors.
- Inheritability – The protection provided by Florida homestead law can be inherited by the surviving spouse or heirs of the property owner. As long as the deceased person does not leave the property to someone other than a spouse or qualifying heir or leave a will that requires the property to be sold, the home will continue to be protected from creditor claims after the owner’s death.
Courts interpret Florida’s homestead laws in a way that benefits homeowners. Florida homestead law has been applied to mobile homes (even if the owner of the mobile home doesn’t own the land where the mobile home is located), houseboats, motor coaches, and travel trailers. Homestead protection can even apply to property that is being leased from a landlord.
Florida Homestead: Family Protection Benefits
To protect a homeowner’s family from disinheritance, the Florida Constitution restricts the homeowner’s ability to transfer homestead property if the homeowner is married. During his or her lifetime, a married person that owns a Florida homestead cannot transfer the home without the participation (joinder) of his or her spouse. The one exception is when a married owner wants to add his or her spouse to the deed to create a Florida tenancy by the entirety. Although a spouse’s signature is not strictly required to create a tenancy by the entirety, including it does not hurt anything and—because it conclusively demonstrates that the spouse signed off of the transfer—is considered good practice. For this reason, the deeds created by our deed preparation service require spousal signature for all homestead conveyances.
These restrictions on transfer also apply to transfers made when the homeowner dies leaving a spouse or minor children. If the homeowner is survived by a minor child, he or she cannot leave the property to anyone other than the surviving spouse or children. Similarly, if the homeowner is survived by a spouse but no minor children, the homeowner can only devise the homestead to the spouse. Any attempt to devise the property to anyone else will fail.
If the homeowner attempts to transfer the property to someone else and the attempt fails, the homestead will pass to the homeowner’s surviving spouse and descendants, if any. If there is both a surviving spouse and descendants, the surviving spouse will receive a life estate and the descendants will receive a remainder interest. The remainder interest is vested in all of the deceased homeowner’s descendants, not just minor children. A surviving spouse may reject the life estate and, instead, receive a one-half interest in the home as tenant in common with the deceased owner’s children. In that situation, all of the deceased homeowner’s children share the remaining one-half interest in the property.
Florida Homestead: Property Tax Benefits and the Save-Our-Homes Cap
Florida law provides for lower property tax assessments on homestead property. Under the Florida Constitution, every Florida homeowner can receive a homestead exemption up to $50,000. The first $25,000 in property value is exempt from all property taxes, including school district taxes. The additional $25,000 exemption is available for non-school taxes and applies only to the assessed value between $50,000 and $75,000.
In 1992, the protection afforded by homestead exemption was amplified by the Save-Our-Homes Amendment, which capped the amount of appreciation that the taxing authorities can tax. Although property value is assessed at “just value” on January 1 of every year, the change in value cannot exceed the lower of 3 percent of the prior year’s assessment or the percentage change in the Consumer Price Index (CPI). This means that, regardless of how much the property appreciates, the value that is assessed for tax purposes cannot exceed 3 percent of the prior year’s value. This provides a valuable economic protection to homeowners, particularly in areas with rapidly appreciating property values. Here’s an overview of the Save-Our-Homes Amendment:
- Qualification. Those who own and occupy their home as a permanent residence and qualify for the general $25,000 homestead exemption automatically qualify for the Save-Our-Homes cap.
- Limitation. The Save-Our-Homes cap limits the property value that can be assessed, not the actual taxes that can be levied. In other words, a homeowner’s property taxes increase by more than 3 percent if the taxing authorities change the millage rates. The cap only applies to increases in property value.
- Improvements or Additions to the Property. Improvements or additions to the property are added to the assessed value and not limited by the cap. For example, if a homeowner builds a new structure on the property that increases the value by $50,000, that $50,000 will be added to the overall assessment without regard to the 3 percent cap.
- Adjacent Vacant Lots. Adjacent vacant lots can be covered by the cap if both the homestead property and the adjacent vacant lot are owned by the person receiving the homestead exemption and that person asks to add the lot.
- Recapture. If property has not been assessed at market value, the taxing authorities can raise the value for assessed purposes by the lesser of 3 percent or the increase in CPI, regardless of whether the property’s value actually increases during the year. In other words, the property appraiser can increase assessed value of properties that are valued below fair market value regardless of whether the property actually appreciates. This allows assessors to bring undervalued properties up to fair market value.
- Portability. A Florida resident who buys a new home can transfer the Save-Our-Homes cap from the previous homestead to the new one. To do so, the Florida resident must re-establish a new Florida homestead within two years of January 1 of the year in which the person left the prior homestead. The person must then submit Form DR501T to the property appraiser for the county where the new homestead is located by March 1.
The protection offered by the Save-Our-Homes Amendment is lost when the home is transferred to a new owner. On January 1 of the year following a change in ownership, the property will usually be reassessed at true fair market value. The new owner can apply for a new homestead exemption at that time, and the cap will begin anew for the new owner.
What is a “Homestead” Under Florida Law?
There are three requirements to qualify for homestead protection under Florida law: a residency requirement, an acreage limitation, and a natural person limitation. These requirements are discussed below.
Only Florida residents can claim Florida homestead exemption. To become a Florida resident, a person must reside in Florida with the intent of residing in Florida permanently. Although it may be easy to determine whether a person resides in Florida at a given time, it is not always easy to determine whether the person intends to reside in Florida permanently. To help avoid questions about subjective intent, a person may file an affidavit with the county clerk stating that he or she intends to reside in Florida permanently. There is a similar affidavit procedure for people who own homes in multiple states.
While filing these affidavits with the clerk can help establish Florida homestead, they are not conclusive. If a person actually lives in another state and uses the Florida home only occasionally (or not at all), the person can’t qualify the Florida property for homestead protection by simply filing an affidavit. A court may look at other factors to determine if the person is a Florida resident, including whether the person maintains a Florida driver’s license, registers his or her vehicles in Florida, is registered to vote in Florida, lists his Florida address on his tax returns, keeps family keepsakes in the Florida residence, or makes his will under Florida law.
Florida homestead protection only protects a homestead if it meets certain acreage requirements. The amount of acreage that will be protected by Florida homestead exemption depends on whether the homestead is located within a municipality. If the residence is located within a municipality, only one-half an acre can be protected by the Florida homestead exemption; if the residence is located outside a municipality, up to 160 acres can be protected.
If the property is located outside a municipality, buildings and other structures on that property will also be considered part of the homestead, even if used for business purposes. Ancillary buildings or other structures used for business purposes would not be protected if the home is located within a municipality.
“Owned by a Natural Person” Limitation
To qualify for homestead protection, the property must be “owned by a natural person” (a human being). If the property is owned by a corporation or a limited liability company, for example, it will not qualify for Florida homestead protection.
This requirement has been interpreted broadly to protect assets that aren’t “owned” in the common sense of the word. Other forms of ownership—such as beneficial or equitable interests in property, undivided interests in property, or the present right to possession of the property—have been found to qualify for homestead protection. For example, one case held that a husband’s equitable interest in property that was titled in his wife’s name was enough to qualify for homestead protection. The same rationale has been used to extend homestead protection to an individual who occupies a home that is held by a trustee.