Families attempting to claim multiple homestead exemptions may receive a visit from the Ghost of Christmas Tax (a/k/a, your local property appraiser’s office). Pursuant to Florida Statute Section 196.031(5), a person who is receiving the benefit of an ad valorem tax exemption or tax credit in another state where permanent residency is required as a basis for the granting of that ad valorem exemption is not entitled to claim a separate homestead exemption in the State of Florida. Folks often mistakenly assume that they can claim a homestead exemption in Florida as long as they do not personally claim an exemption in another state. On March 23, 2016, Florida’s Fourth District Court of Appeal determined that a “family unit” cannot claim two homestead exemptions in different states, even if the properties are owned individually by different spouses.
For example, consider Belle and Ebenezer Scrooge, a married couple. Belle, a New York resident, owns a home in New York titled solely in her name. Ebenezer, a Florida resident, owns a home in Florida titled solely in his name. If Belle claims a residency-based homestead exemption in New York, Ebenezer cannot claim a homestead exemption in Florida, even though Ebenezer’s Florida property is titled solely in Ebenezer’s name, and Belle’s New York property is titled solely in Belle’s name. Although Ebenezer did not claim a homestead exemption in New York, his family unit technically benefits from Belle’s homestead exemption in New York.
Let’s say Ebenezer decides he wants to save a few pennies, and files for a homestead exemption in Florida, despite the advice of his trusted attorney, Jacob Marley, Esq. Because the Scrooge family benefits from more than one residency-based homestead exemption, the Scrooges have effectively committed homestead exemption fraud. If the local Florida property appraiser, Bob Cratchit, makes a determination that the Scrooges have committed homestead exemption fraud, the Scrooges may soon find that a tax lien has been recorded against Ebenezer’s Florida property. Homestead exemption fraud can result in considerable financial penalties and the loss of any “save our homes valuation cap”, which is sure to anger Ebenezer. After paying the homestead exemption fraud penalties to remove the tax lien, the Scrooges may find that they do not have enough left over to buy that extra Christmas turkey for their friend, Tiny Tim!
Arguably, if Belle and Ebenezer are separated, but not yet divorced, Belle and Ebenezer may be able to convince Bob Cratchit that there is not a single-family unit benefiting from the dual homestead exemptions. In unique circumstances, when spouses have two separate permanent residences and the spouses do not provide benefits, income, or support to each other, each may be granted a homestead exemption. That being said, the safest homestead exemption strategy is to claim a single homestead exemption in whichever state offers the largest tax benefit or the most extensive creditor protections.
If you have questions about claiming a homestead exemption in Florida, contact Jacob Marley, Esq. (or your trusted real estate attorney).
Berlin Patten Ebling, PLLC
Article Authored by Benjamin T. DeMarsh, Esq. firstname.lastname@example.org
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.
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