Florida’s Homestead Tax Exemption and Your Probate Estate
Your primary residence or “homestead” enjoys a number of special protections under Florida law. For example, most unsecured creditors cannot force you to sell your homestead in order to pay off your debts. This exemption, which is provided in the Florida Constitution, extends to your spouse or minor children if they continue living in the homestead after your death.
The Florida legislature has also created a statutory homestead exemption that reduces your annual property tax bill. You need to apply for this exemption annually with your county’s property appraiser. You only qualify for this tax exemption on your primary residence.
Why It Matters If You Are (or Were) a “Permanent Resident” of Florida
If you improperly claim a homestead tax exemption, the appraiser may seek to collect any back taxes owed in addition to interest and penalties. This includes potential action against a deceased owner’s probate estate. Under Section 196.161 of the Florida Statutes, the government may look back up to 10 years prior to an owner’s death, or 3 years after their death. If for any year during this period the appraiser determines the deceased was not eligible for a homestead tax exemption, the estate can be forced to pay the tax for that year–as well as a 50 percent penalty and 15 percent annual interest. However, the estate can avoid these penalties if it can prove to the probate court that the decedent was in fact a “permanent resident” of Florida during the tax years in question.
To put this in simpler terms, let’s say you own a house in New York and a house in Florida. You cannot claim homestead exemptions in both states. If you do, and the county appraiser in Florida finds out about it after you die, they can go after your estate for the unpaid Florida property tax plus interest and penalties. Your estate would then need to prove you were actually a “permanent resident” of Florida during those years you claimed both exemptions. (And even if you succeed, New York may then come after you for improperly claiming its homestead exemption.)
It is also worth noting that this “permanent resident” defense may not be available when the homeowner is still alive. The Florida Second District Court of Appeals recently addressed this in Fitts v. Furst. In that case, the court held the Sarasota County appraiser’s decision to collect back taxes, interest, and penalties against a still-living married couple was justified, notwithstanding the couple’s ability to prove they were Florida permanent residents. The couple apparently received a $560 homestead exemption in Ohio due to third-party error. This made them ineligible for the Florida homestead exemption during a five-year period, despite the fact they did not intentionally mislead Florida authorities. And since the statute did not expressly extend the same permanent resident defense to living homeowners as those who are deceased, the Second District said the couple in this case were out of luck.
Get Advice from a Florida Estate Planning Attorney Today
The homestead exemption is just one of many legal issues that may have an impact on your estate plan. If you need advice on this or any other subject from an experienced Fort Myers estate planning lawyer, contact the Kuhn Law Firm, P.A., at 239-333-4529 today to schedule a free consultation.