Can I Lose my Homestead Exemption in Florida?

Under Florida law, a person may qualify for a homestead exemption if the person owns property in the state and that property is the person’s permanent residence. The law provides for a lower property tax assessment on a homestead property, which leads to property tax savings for homeowners.

To qualify for the homestead exemption, a person must meet certain requirements, explained in the statute.[1] Additionally, a person may lose their homestead exemption if the requirements of the statute are not met every year. Once a property no longer qualifies as a homestead property, Florida law regards it as a nonhomestead property and assesses taxes on the property at a different percentage.

[1] Fla. Stat. § 196.031 (Exemption of homesteads).

What is a Non-Homestead Property?

“Non-homestead residential property” means residential real property that contains nine or fewer dwelling units, including vacant property zoned and platted for residential use, and that does not receive the homestead exemption. Examples of nonhomestead property are second homes, rental properties, vacation homes, vacant land or commercial property.

Why Can’t I Claim Homestead Exemption on a Rental Property in Florida?

Unfortunately, if a homeowner rents their property, this qualifies as an abandonment of homestead. However, this depends on when the homeowner started renting the property and on how long the homeowner rented the property for. For example, a homeowner can not claim the homestead exemption on a property that is rented for more than 30 days per calendar year for 2 consecutive years.

Under the Florida Statutes, the “rental of all or substantially all of a home 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 on any year does not affect the homestead exemption for tax purposes for that particular year unless the property is rented out for more than 30 days per calendar year for 2 consecutive years.” This does not apply to members of the Armed Forces of the United States.

So, as an example, a snowbird could be in their Florida home on January 1st, claim homestead, and then leave for the rest of the year. Then on the next year, so long as he is in the residence on January 1st again, then he can claim homestead again. However, a snowbird could also claim homestead on the 1st and then rent out the property for the rest of the year. In this scenario, he could still claim homestead every other year.

The Miami-Dade County Property Appraiser’s Office issued a warning in 2017 taking a hard line on Airbnb transactions. The Appraiser’s Office asserts that renting out a homestead property through Airbnb is tax fraud, and the county is looking to disallow homesteads for those engaged in renting out a room in their home. This warning should be taken seriously by those receiving the benefits of homestead, while renting the property. The Appraiser’s Office could disallow homestead going back ten years, resulting in; loss of the $50,000 exemption: revaluation of the property for each year with a 10% cap on increase, instead of the standard 3% for homestead property; and Add on to that a 50% penalty and 15% interest rate.

What is the 10% Cap Assessment Limitation for Non-Homestead Property?

Under Florida law, a non-homestead residential property is assessed at just value the first year the property value is assessed. After the first year, the reassessment of the property value will not increase by more than 10 percent. For example, in 2019, if a non-homestead property was assessed at just value, then when the property is reassessed for 2020, that reassessment value may not exceed 10 percent of the property’s prior year value.

In comparison to a non-homestead property, after the first year that a homestead property is assessed, the reassessment of the property value may not exceed the lower of: 3 percent; or the percentage change in the Consumer Price Index for All Urban Consumers.

EPGD Business Law is located in beautiful Coral Gables, West Palm Beach and historic Washington D.C. Call us at (786) 837-6787, or contact us through the website to schedule a consultation.

*Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns. Contacting us through our website does not establish an attorney-client relationship.*

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