The following are tips and traps related to applying for and maintaining homestead on a Florida primary residence:
- Review and File for all Qualified Exemptions: The homestead exemption is the most well-known of the Florida exemptions available to residents, however, it is not the only exemption available. When filing for homestead, make sure that all available exemptions are applied for and utilized. For example, if an individual has recently lost their spouse, they may qualify for the widow or widower exemption. Individuals who are partially or totally disabled may receive an exemption to reduce the real property taxes owed on their primary residence. Other exemptions include: disabled Veterans, individuals who are blind, senior citizens with low income, deployed military personnel, combat-wounded Florida disabled Veterans, and totally and permanently disabled first responders. These additional exemptions may be combined with the regular homestead exemption and/or each other (as applicable). Any additional exemptions should be applied for at the same time as the homestead application is submitted. Also keep in mind that certain additional exemptions do require extra documentation to prove a resident is qualified to receive such additional exemption(s). Finally, in the case of changed circumstances, a homestead owner may apply for any such additional exemptions when they become qualified.
- Follow the Deadlines: The deadline to file homestead is March 1stof each respective year that a homeowner intends to claim homestead, provided that the subject real property was the homestead of the Florida resident as of the first day of such year. Filing by the March 1st deadline is extremely important, however, in some circumstances a late homestead exemption filing may be accepted. In such case, a homeowner is usually required to provide “cause” or reasons for the late filing. The late filing should be submitted by September of the same year as the missed deadline and generally such late filings are accepted. In more limited cases, a filing beyond September may be accepted with the payment of a late fee (in the discretion of the Property Appraiser’s office in the respective homestead county).
- Homestead CANNOT be Inherited: One common misconception about homestead, due to its dynamic function, is that homestead can be inherited by the individual receiving the property after a homestead owner dies. This misconception is usually shattered when the homestead property’s heir receives a tax bill in the year following the homestead owner’s death. Of course, there is an exception for married couples where the homestead continues for the benefit of the surviving spouse if such spouse has the beneficial interest for life in the homestead property. In some instances, excluding transfers to spouses having a beneficial interest for life, the loss of homestead can lead to a tremendous increase in the real property taxes for such property, especially if the property has been homesteaded for a very long time. A useful strategy in such case would be to estimate the increase in taxes and if such increase is not affordable by the heir, the heir should plan to sell such residence before any such increased taxes become due (typically, November).
- Renting Homestead Property :Renting any property declared as homestead is not recommended and should be avoided. The homestead is the primary residence of the property owner and not a business entity, therefore, any indication of rental provides evidence that the property owner is not actually residing in the property as their primary residence. If necessary, although discouraged, any rental must be as minimal as possible and only be “incidental” and not a regular occurrence.
- The Qualified Personal Residence Trust (QPRT) and Homestead: The QPRT is an Estate Tax reduction strategy that distributes an individual’s primary residence to another person after a number of years using an Irrevocable Trust, the QPRT. In such instance, the original property owner should retain a long term lease (for example, a ninety-nine (99) year lease) from the QPRT remainder beneficiaries in order to not disqualify the original owner’s homestead on the Property. If such lease is retained, then homestead should continue uninterrupted.
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The Presser Law Firm, P.A.
6199 N. Federal Highway, Boca Raton FL 33487
(561) 953-1050 or e-mail Info@AssetProtectionAttorneys.com