Every Florida property owner knows something about homestead rights. Many also make false assumptions because this may be their first home and they rely on what someone else has told them. It may be because the owner is from out of state, where homestead rights are different, and because laws change every so often. Every potential buyer should be clear on the subject, so this introduction to homestead property will help you explain the basics.
Homestead Property Rights
There are several beneficial rights associated with homestead property:
- A homestead is protected under Florida law from a creditor who may want the owner to sell their home to pay off debts. Only a loan secured by the property, such as a mortgage or HELOC (Home Equity Line of Credit) gives a creditor the right to force a sale.
- This protection can also extend to a surviving spouse, should the homeowner die with non-secured debt.
- Homesteaded property benefits from certain real estate property taxes. The first $25,000 of assessed value is exempt from all property taxes.
- Another $25,000 of assessed value is exempt from school district taxes.
- Florida’s Save Our Homes laws caps the annual increase in tax assessed valuation. The increase is limited to either 3% or the percentage change in the Consumer Price Index.
- Some or all of the “earned exemptions” can be transferred, or “ported” to a new home when the current homestead is sold.
A Less Well-Known Homestead Right
Homestead law was amended in October 2010. Before then, if a deceased owner had entered into a second marriage (whose children from the first marriage would inherit the property) the surviving, non-owning spouse had the right to remain in and maintain the property until they passed away. At that point the original spouse’s children would inherit.
Now, if the second marriage lasted for more than six years before the bereavement, the surviving spouse’s rights increase from what they were. Now, the survivor can legally hold 50% with the other 50% going to the first spouse’s children. This obviously halves the living costs for the surviving spouse because the children will now be liable for half the property taxes, etc.
The surviving spouse can leave their 50% to someone of their choice to inherit.
How Do You Homestead Property?
- Own, or have beneficial title in, the property as a primary residence on January 1 of the tax year. (This is one reason there are so many closings in November and December.)
- Visit the County Property Appraiser’s office in person before March 1 to apply for homestead exemption.
- Prove Florida residency and primary ownership by providing the documents required by the clerk.
Real estate professionals who can explain details like these to clients will set themselves apart from those who cannot. At IFREC we want all of our students to not only pass their license exams but to prove their professionalism every day. If you would like to learn more about our services, please just click this link to contact us.