Short-Term Rentals and Loss of the Homestead Exemption

The Florida Property Tax Exemption for Homesteaded Property provides valuable tax benefits to owners of real property in Florida.  Homestead exemption tax benefits include a reduction in the taxable value of a primary residence, as well as a cap on any increase in the taxable value of the residence.  Owners are frequently interested in renting their homesteaded property on a short-term basis to generate supplemental income.  Before an owner decides to rent property with a homestead exemption, beware that renting will likely result in a loss of the homestead exemption!

Under Florida Statute 196.061, “The rental of all or substantially all of a dwelling previously claimed to be a homestead for tax purposes shall constitute the abandonment of such dwelling as a homestead, and the abandonment continues until the dwelling is physically occupied by the owner. However, such abandonment of the homestead after January 1 of any year does not affect the homestead exemption for tax purposes for that particular year unless the property is rented for more than 30 days per calendar year for 2 consecutive years.”

In sum, if the owner of a homesteaded property rents all or substantially all of their property for more than 30 days per year for two consecutive years, the owner will lose their homestead exemption. If the owner gets caught renting a property with an improperly claimed homestead exemption, the penalties can be drastic, including a disapproval of the homestead exemption, along with a 50% penalty and 15% interest for any year or years the property was rented in the prior 10 years.

A word to the wise, homestead exemption audits are on the rise.  In Florida, short-term rental operators are typically required to pay a tourist tax for rentals of six months or less. Owners of homesteaded property that is being rented on a short-term basis should be aware that some local taxing authorities are carefully monitoring tourist tax receipts, and cross-referencing those tax receipts with the local property appraiser’s records. A property with a homestead exemption that generates substantial amounts of rental income is likely to trigger an audit by the property appraiser’s office. Some property appraiser officials are even scouring websites like www.Airbnb.com and www.vrbo.com for rental operations that are fraudulently claiming a homestead exemption.

Before renting out homesteaded property on a short-term basis, it is critically important that owners weigh the benefits of the homestead exemption with the benefits of renting the property. If you have questions regarding the loss of the homestead exemption in connection with the short-term rental of a property, contact a local, knowledgeable, real estate attorney.

Sincerely,

Berlin Patten Ebling, PLLC
Article Authored by Ben DeMarsh  bdemarsh@berlinpatten.com

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.

www.berlinpatten.com 

SARASOTA

3700 South Tamiami Trail, Suite 200, Sarasota, FL 34239   P (941) 954-9991  F (941) 954-9992

VENICE

247 Tamiami Trail South, Suite 201, Venice, FL 34285  P (941) 955-9991  F (941) 484-9992

LAKEWOOD RANCH

8130 Main Street, Suite 206, Lakewood Ranch, FL 34202   P (941) 907-9022  F (941) 907-9024

Did you find this real estate law content useful, but need actual legal counsel?

Speak to a real estate attorney!

, , , , , , ,

“Save Our Homes” And Portability

  On Election Day a couple weeks ago, Florida Amendment 5 was approved with strong support. This amendment extends the period during which property owners in Florida may transfer their accrued “Save Our Homes” benefit to a new homestead from two to three years. Beginning January 1, 2021, an owner of homestead property will now…

Jump On The Refi Train, But Don’t Leave Your Estate Plan at the Station

  The mortgage business is booming in many parts of the country with historically low interest rates. However, one often overlooked consideration is the impact that refinancing your home could have on your estate plan. Most of the effect of a refinance on an estate plan will depend on the following factors: 1. How the…

My Cousin “Minny”

Your Cousin Minny dies in Florida leaving you Florida real property. Now you are tasked with how do you get clear title to the real estate to sell the property? A full blown probate or ancillary probate is costly and time consuming, but it may be the only way to clear title. However, you should…

My soon to-be-ex Needs to Sign What?

  Your friend of a friend from Michigan, Mr. Buyer, tells you he is newly retired, single, and ready to start the next chapter of his life in the Sunshine State, so he reaches out to you as his real estate agent to begin the property hunt. Two weeks later, he has found his dream…

When Estates Become Part Of Your Closing

We routinely get the frantic call from a realtor or closing party to address a title issue or incident involving a deceased buyer or seller, or even a prior party further back in the chain of title. Those inquiries come with the urgent questions: Can you fix it? Can it be done before closing? How…

Love Tax Exemptions? Don’t Forget to File!

Roses are red, Gators are orange and blue, it’s the season of love and applying for tax exemptions too! It’s that time of the year when new homeowners are settling into their homes, and with so many tasks and deadlines, it is easy for homeowners to forget about applying for property tax exemptions and discounts.…

Homestead…The Gift That Keeps On Giving!

With the holiday season fast approaching, giving is on everyone’s mind. While finding the perfect gift for a loved one can be difficult, enjoying the perks of Homestead shouldn’t be. The Homestead provisions of the Florida Constitution are the State’s gift to the permanent residents of Florida. If you are a permanent resident of Florida…
Overlap between Real Estate and Estate Planning

Overlap between Real Estate and Estate Planning (other than the word “Estate”)

Anyone involved in real estate needs to be aware of estate planning issues that will likely apply to their real estate ownership and transactions. As you can see from the following list, there is a lot of crossover between estate planning and real estate, along with tax issues, and asset protection, among others. We have…
Florida Homestead Exemption

Renting Away the Florida Homestead Exemption

As most Florida homeowners know, the Homestead Tax Exemption (hereinafter the “Exemption”) is a valuable savings tool. The Exemption allows for a $50,000.00 reduction of a property’s assessed value and includes the Save Our Homes cap that limits annual increases in assessed value of real property to 3%. However, today many homeowners are attempting to…
Homestead laws

To Wed or Not to Wed – Who Needs to Sign?

As most of us know, Florida law affords spouses significant protections, particularly when it comes to homestead. Homestead laws are fantastic and somewhat easy to follow when spouses are living in marital bliss, as our beloved Jamie Ebling will be doing from and after August 30, 2017. It is then that Jamie will be married…

Economic Benefit of Homestead Exemption in Florida

Can you believe 2017 is almost here?  Although the hustle and bustle of the holidays can get to the best of us, it is important to remember that now is the time to consider the Florida Homestead Exemption and the great benefits it offers to Florida residents. First and foremost, to be entitled to receive…
Menu