You’re moving to Florida and planning on buying a home. If you intend to live in the home full-time or make it your primary residence, you’re in luck! You benefit from the strongest homestead protection laws in the country. Here’s some information about Florida’s Homestead Law and how to qualify for its protections.
Florida’s Homestead Law allows residents to shield their primary residence from creditors. This law exempts an unlimited amount of equity, which refers to the value of the property minus any outstanding mortgage or other debts, in homestead property, up to 160 acres in an unincorporated county or 1/2 acre within city limits.
Under this law, creditors are barred from forcing the sale of a debtor’s homestead to settle a money judgment, and recorded judgments do not attach to or become liens on homestead property. Importantly, Florida courts have extended homestead protection beyond single-family houses, including condominiums, mobile homes, and manufactured homes, demonstrating the flexibility and inclusivity of this protection.
In addition to the protection afforded by the homestead law, Florida offers a homestead tax exemption, reducing the taxable value of primary residences by up to $50,000 and capping annual increases at 3%.
Florida’s homestead protection is the strongest in the nation and safeguards unlimited value in the debtor’s homestead property. This protection is enshrined in the Florida Constitution, making it more enduring than statutory protections, which are laws passed by the state legislature, subject to legislative changes. For example, a statutory protection could be a law that limits the amount of debt a creditor can collect. Future laws cannot override or diminish exemptions provided by the Florida Constitution. Due to the strength of this protection, high net-worth people often relocate to Florida to acquire a homestead and protect their assets from creditors.
Homestead property in Florida consists of a person’s primary residence in the state, covering no more than one-half acre in a municipality or 160 acres in an unincorporated county. All contiguous property, regardless of separate legal descriptions, is included in the homestead.
Use of the property by the owner’s family adds additional protection. The square footage of the dwelling and its value are not restricted based on location.
If a homestead exceeds size limitations, protection is allocated proportionally to the total property value. This means that a creditor could force the sale of a homesteaded property in the city and take that part of the value attributable to the excess size.
To qualify for homestead protection, one must be a Florida resident and a natural person (not a legal entity such as a corporation or trust). However, the title can be held in the name of your revocable living trust. One must also personally occupy the property, which means moving into the home with principal belongings and using it as your primary residence.
The homestead exemption from creditors is automatic, but the homestead tax exemption requires filing with the county and residency on January 1 of the calendar year. To file for the homestead tax exemption, you need to submit an application to your county’s property appraiser’s office. The application is due by March 1 of the year for which you are seeking the exemption.
Exceptions to homestead protection include liens voluntarily given to secure loans, which are legal claims on property used as collateral for a loan, and mechanics liens for construction services, which are claims for unpaid work or materials provided during the construction or renovation of a property. Liens for homeowner association dues and special assessments, and property, state, and IRS tax liens are also exceptions, as stipulated in the Florida Constitution. Note that the state constitution prohibits the state legislature from creating additional exceptions.
In our real estate sales practice, we have sometimes encountered people who qualified for the homestead exemption but failed to file for it. Their negligence exposed them to unnecessary risk, and they paid more in property taxes than necessary.
We strongly advise our home buyers to take prompt action and file for homestead protection as soon as possible after closing on their purchase. This proactive step can help them secure their property and enjoy the benefits of homestead protection without delay.
Leave a Reply