Florida law allows homeowners who use their Florida home as their residence to claim a homestead exemption. The Florida Constitution provides a tax-saving exemption by reducing the taxable value of real property by up to $25,000, and $50,000 for a married couple. Florida homeowners are entitled to a Homestead Exemption if, as of January 1st, they have made the property their permanent home or the permanent home of a person who is legally or naturally dependent on them. January 1st of each year is the date on which permanent residence is determined. If a homeowner does not use the home as their primary residence for a single year, they cannot claim homestead again until two years later.
But in today’s day and age, many homeowners look for extra cash and rent out a single room or even their whole home on applications like Airbnb. This rental could jeopardize the exemption, but there is still a chance to claim the exemption at least every other year.
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.
If you think you are eligible to claim the Homestead exemption or that you may be risking your Homestead exemption, please do not hesitate to contact one of our experienced attorneys at EPGD Business Law, located in beautiful Coral Gables. Call us at (786) 837-6787 or email us 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.*