Only One Can Win? Property Tax Exemptions Based on Residency Under Florida Law.

• Author: Sneeringer, Michael A.
• Position: Real Property, Probate and Trust Law

Clients want to move to Florida and keep their residency-based property tax exemption afforded in their prior state of residence. Upon moving to Florida, clients inevitably want to know the "trick" or "secret" to keep such residency-based property tax exemption. If the client is single, he or she will not be able to keep his or her residency-based property tax exemption. If the client is married, the "trick" or "secret" is no more than divorce: Florida residents arguably may not have two residency-based property tax exemptions consisting of an exemption in Florida and an exemption in another state. There is one special exception, but in reality, county property appraisers afford applicants this exception only after the applicant has met an extremely high standard of proof. This article highlights that a Florida resident may be entitled to more than one residency-based property tax exemption consisting of such Florida resident's Florida homestead exemption, coupled with a spouse's residency-based property tax exemption in another state, where such Florida resident establishes that he or she and his or her spouse are "separate family units."

Overview

The Florida Constitution protects homesteads in three different ways: it provides the homestead with an exemption from taxes (1); it protects the homestead from forced sale by creditors (2); and it places certain restrictions on a homestead owner from alienating or devising the homestead property. (3)

Florida provides that a portion of an individual's homestead is exempt from forced sale by process of any court. (4) Further, no judgment, decree, or execution is permitted to constitute a lien on a homestead other than for the payment of: 1) taxes and assessments related to such property; 2) obligations contracted for the purchase, improvement, or repair of such property; or 3) obligations contracted for house, field, or other labor performed on such property. (5)

The homestead must be owned by a "natural person." (6) The portion of a homestead protected by this exemption will vary depending upon the location of the property. If the homestead is located in an unincorporated area, the exemption will protect up to 160 acres of contiguous land and improvements on such land. (7) If the homestead is located within a municipality, the exemption will protect up to one-half acre of contiguous land, and the exemption is limited to the residence of the owner or the owner's family. (8)

Florida provides certain exemptions that reduce or otherwise eliminate ad valorem taxes relative to homestead. However, to be eligible for the homestead exemption, the owner must be a permanent resident of Florida and have a present intent of living at the property. (9) Additionally, the owner must apply for the exemption. (10)

The Issue

Generally, a married couple is entitled to only one homestead exemption. (11) However, a married couple may establish separate permanent residences and qualify for a homestead exemption without showing impelling reasons or just ground for doing so if it is determined that separate permanent residences and separate family units were established. (12)

If one of the spouses resides in another state and receives an ad valorem tax reduction with respect to his or her residence, generally, the spouse living in Florida is not entitled to a homestead exemption for his or her Florida residence. In Collier County for example, the Collier County Property Appraiser's website notes in italics: "Florida Statutes allow only one [h]omestead [e]xemption per 'family unit.' This means that anyone applying for the [h]omestead [e]xemption in Collier County would not be legally entitled to receive the exemption if they or their spouse are receiving residency-based exemption(s) in another state. This includes veterans and senior citizen exemptions." (13) This will not be the case if each spouse is establishing for himself and herself a separate residence, the spouses have no financial connection with one another, and neither spouse is providing "benefits, income, or support" to the other. (14) The following cases highlight different varieties of the aforementioned general rules.

Homestead Exemption Granted

* Married Couple Living Separately in Florida Each Entitled to Homestead Exemption by Florida Bankruptcy Court--In Colwell v. Royal International Trading Corporation, 226 B.R. 714 (S.D. Fla. 1998), debtors, husband and wife, sought to exempt real property from creditors' claims filed in bankruptcy. At the time of their joint bankruptcy petition, the debtors had been maintaining separate residences for the preceding three and a half years. Each was afforded a...