I have encountered a lot of confusion lately regarding the import of the term “homestead” under Florida law. At its most basic level, homestead is a Florida resident’s primary residence. Designation as homestead, however, carries several important benefits and burdens.
Homestead is found in 3 different contexts under the Florida Constitution: (i) taxation in Article VII, Section 6; (ii) creditor protection in Article X, Section 4(a) and (b); and (iii) devise and descent in Article X, Section 4(c). I will touch on these in three separate posts.
Homestead Exemption
Article VII, Section 6 of the Florida Constitution provides generally that all owners of a homestead are entitled to an exemption from ad valorem taxation in an amount up to $25,000 for essentially all assessments, and another $25,000 for all levies other than school district levies. This applies whether the owner holds legal title (e.g., typical outright individual, joint, or tenants by the entirety ownership), equitable title (e.g., as trustee of a trust), and even in the event of a leased property so long as the term is in excess of 98 years. Beyond the base exemption, Article VII, Section 4 of the Florida Constitution provides additional homestead benefits in the form of the “Save Our Homes” assessment cap and homestead “portability.”
Save Our Homes
The “Save Our Homes” assessment cap generally provides that the assessed value of homestead real property cannot increase by more than 3% of the prior year assessment or the prior year change in the Consumer Price Index, whichever is lower. A change of ownership or discontinuing use as homestead will allow the assessments to increase beyond this cap for the particular property.
Portability
Additionally, residents may “port” the benefit of their assessment cap to a new home if they had a homestead exemption within the last two years. The benefit is essentially measured as the difference in the market or “just” value and assessed value of the prior homestead. The benefit of the cap transfers in full if the new homestead has a higher value, and proportionally if the value is lower, subject in any event to a $500,000 benefit limit.
Other Exemptions
Note that there are additional exemptions provided in both the Florida Constitution and Statutes. The Department of Revenue has an overview of the available exemptions here.
Caveat
This post provides only a summary of general information. As with any taxation matter, there are numerous technical compliance requirements involved with the above exemptions. If you need assistance with a homestead exemption or other real property tax exemption, contact a Florida real estate attorney.
