Declaring Homestead in Florida
Your client is moving from out of state, say from California or New York, and they have maintained a vacation home or have investment property here in sunny Florida. Now, they are ready to make Florida their permanent home and want to make this Florida residence their homestead. Sounds relatively simple, right? But what if your out-of-state family has this Florida home titled in the name of a corporation, an LLC, a family partnership, an irrevocable trust, or some other business entity? Under Florida law, you cannot declare this property homestead if it is titled as such, and you must take steps for your out-of-state family to enjoy the benefits of Florida’s homestead protections and exemptions.
What is homestead here in Florida? An Overview
Simply put, if you are a permanent resident of Florida and the property is your primary residence, you are eligible for Homestead protections and exemptions. And your primary residence does not have to be a single-family home. Homestead can be applied to condominiums, mobile homes, and manufactured homes. However, you can have only one homestead residence. You cannot split it between two different pieces of real property, even if they are both here in Florida or even within the same county. Further, there is a lot size limitation to your homestead, which is up to one-half (1/2) acre within a municipality and up to a contiguous 160 acres for residences outside of a municipality.
The Homestead provisions of the Florida Constitution and Florida Statutes cover two general areas: property taxes and protection from creditors. From the property tax standpoint, a property owner is eligible for a property tax exemption of up to $50,000.00, meaning that the taxable value of the homestead residence is reduced by up to $50,000.00, resulting in significant tax savings for the homestead homeowner. From the creditor protection side, owning a residence with a homestead designation protects the owner’s homestead property from levy and execution by judgment creditors. In other words, unsecured creditors (i.e., creditors other than a mortgage company, construction lienholder, or other secured creditors) cannot force the sale of your homestead to satisfy the creditor’s money judgment.
How Do You Get Homestead Protection?
- You must own the real property you seek to make your homestead on or before January 1.
- You must occupy the real property you seek to make your homestead on or before January 1.
- You must declare it your primary residence and apply for the homestead exemption by March 1 of the same calendar year you are looking for the exemption within the county where the real property is located.
Finally, you are required to provide documentary evidence showing that this real property in Florida is your primary residence, such as a Florida driver’s license or proof of giving up your former driver’s license from another state, utility bills, or a Florida voter registration card. This is not an exhaustive list but a few examples of what qualifies as proof of residency.
Who is Eligible to Apply for Homestead in Florida?
As stated above, to apply for the Florida homestead exemption, the applicant must be a permanent Florida resident, the homestead property must be the primary place of residence of the applicant, and the applicant must be a natural person. What does “natural person” mean? It is easier to explain what a “natural person” is not. A natural person is not a corporation, a limited liability company, a partnership, or an irrevocable trust. As such, before you can qualify for a homestead exemption for real property you own here in Florida in the name of a business or an irrevocable trust, you need to retitle that property through a new deed that gets recorded in the count where the real property is located.
Transferring real property out of business or trust and into the name of an individual, a married couple, or a trust that qualifies under Florida homestead laws requires knowledge, experience, and an understanding of how Florida laws regarding real estate, homestead, estate planning, and even businesses intertwine. As always, before you or your client moves here to Florida to change their vacation home into their homestead residence, if you have any concerns about how the property is currently titled or how to properly transfer title from a non-qualifying owner to a qualifying owner for homestead purposes, please reach out to a qualified real estate attorney.
