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Can Florida Exemptions For Properties Located in Other States Hold Up?

Becoming a homeowner in Florida can be a pretty expensive affair. The highly competitive real estate market in the Sunshine State has caused prices to soar, and they don't seem to be coming down anytime soon. However, property prices are not the only thing you need to worry about when purchasing a property in Florida. Even if you can secure home financing, you will inevitably have to deal with excessive property taxes.

Fortunately, Florida homestead exemptions are powerful tools that can help ease your property tax burden significantly. So, in this guide, you will learn everything you need to know about Florida homestead exemptions, including how they work, requirements for eligibility, and whether they apply to Florida residents who own homes in other states.

What Is The Florida Homestead Exemption?

Under Florida law, every individual who possesses legal or equitable title to real property in Florida and makes it their permanent home or permanent residence is entitled to a homestead exemption of up to $50,000. All property taxes are exempt up to $25,000, while the additional $25,000 applies solely to non-school taxes with an assessed value of more than $50,000.

How Is The Florida Homestead Exemption Calculated?

As a general rule, every piece of real estate has three values: its just value, assessed value, and taxable value. The just value is the property's market worth, but the assessed value is the just value minus the assessment constraints. The taxable value is the assessed value less exemptions, and it is the value used by the tax collector to compute the taxes owed. As a result of the homestead exemption, you may be free from paying taxes on up to $50,000 of your home's assessed value.

Eligibility Requirements For Florida Homestead Exemption

Although Florida's property tax exemption can save you significant money, not everyone is automatically eligible for it. There are several conditions that you must satisfy to qualify for it. These include:

  • You must be the owner of the property

  • It would help if you were permanently residing on the property you wish to claim exemptions for

  • The property you're seeking exemptions for must be the permanent residence of anyone you claim as a dependent

  • You must have been a property resident as of January 1 of the tax year in question.

  • You should not have rented the home for more than 30 days during the calendar year. Renting the property for more than 30 days in a row or more than six months is typically regarded as an abandonment of the Florida homestead exemption.

If you're unsure if you fulfill these requirements, contact your tax preparer or CPA. They can assist you in understanding the technicalities of Florida's tax code to establish if you are eligible for the homestead exemption.

What Are The Necessary Documents For The Florida Homestead Exemption

To claim a Florida homestead exemption, you must complete specific, very particular procedures within a set time limit and, by necessity, within a specific order. According to Florida law, a homeowner must own and occupy the house as of January 1 of the year the application is filed; however, the application may be filed as late as March 1.

The documents can be sourced through the Property Appraiser's Office in each county and accessed on the internet.

When applying for the homestead exemption, you will be required to provide the following documents:

A Valid Florida Driver's License or State ID

If you're looking to claim a homestead exemption, you must first obtain a Florida driver's license. A Michigan driver's license will be recognized by Florida as grounds for granting a new Florida driver's license without the need for an exam or road test, usually for a considerably longer period of time than the remaining duration of the Michigan license. If you don't have a driver's license, you may use a Florida ID Card instead.

It is worth noting, however, that Florida has several requirements for one to obtain a license, including:

  • A certified copy of a birth certificate or passport
  • Proof of residence
  • Proof of Social Security

Valid Voter Registration or Declaration of Domicile and Residency in Florida

If you intend to register to vote in Florida, which is strongly advised, you must do it ahead of time. It's worth noting that Florida requires new residents to apply for a driver's license within 30 days of establishing residency and to register automobiles within ten days of establishing residency, so submitting a Declaration of Domicile as soon as possible is highly recommended.

You Must Have At Least One Of Your Vehicles Registered In Florida

To register a car in Florida, you must obtain insurance from a firm that does business in Florida. Registering all of your vehicles in Florida may be advantageous because insurance costs are often substantially lower than those in other states. With that being said, the first Florida license plate you get for each car needs a substantial one-time charge of $250.

Proof Of Ownership Of The Property You're Claiming Exemption For

In most instances, specifically, if you have owned the dwelling for a long time and are filing for the homestead exemption online, the Appraiser's office will record your ownership of the property. However, if you hold the title in trust, you may be asked to provide a Certificate of Trust and specific necessary trust papers.

Suppose you hold title in a trust or intend to. In that case, you may need to amend the trust to include a homestead paragraph stating that the grantor and their spouse (if they are married) have the exclusive and sustained present right to full use, occupancy, and residency of the property indefinitely. It is worth bearing in mind that particular assessors may deny your homestead exemption application if this clause is not included in your application.

Moreover, the particular language used in deeds placing a Florida dwelling into a trust may negate the requirement to provide a Certificate of Trust later when qualifying for the homestead exemption. To prevent unnecessary problems, you should contact a Florida-licensed attorney before putting your real estate ownership in trust.

An aerial view of beautiful houses in a residential neighborhood on a sunny day in Florida

How To Apply For The Florida Homestead Exemption

Once you have prepared all the documentation required for applying for homestead exemption, you need to fill out the DR-501 form. There are three ways in which you can complete your homestead exemption application. These are:

  • Fill out the form online and choose the state's e-file option.

  • Print and complete the form, then submit it to Palm Beach County Property Appraiser's Office, Exemption Services, 301 N. Olive Ave., West Palm Beach, FL 33401.

  • Fill out the form at one of the state's in-person service locations.

Whether you fill out the form online or in person, you'll be required to show documentation of your Florida residency and the address where you want to claim the exemption.

How Do I Keep A Florida Homestead Exemption?

The fact that you don't have to reapply for the Florida homestead exemption every year is perhaps one of the best features of this provision. Unless you take action to cancel your exemption, the state will automatically renew it. After you are initially accepted for the homestead exemption, the state will issue you an exemption renewal sometime after January 1 of each year.

On the other hand, you should notify the state if and when you are no longer qualified for the exemption.

Here are some of the factors that may make you no longer eligible for this property tax break:

  • If the homestead is no longer your permanent residence or the permanent residence of any individual you have claimed as a dependent

  • If you rent the property for more than 30 days in a year

  • If the property has changed ownership following marriage, divorce, death, or any other event

It's critical to notify the state if you no longer qualify for the Florida homestead exemptions. Failure to do so will make you subject to a tax lien accompanied by interest and penalties.

Other Property Exemptions In Florida

While the Florida homestead exemption is a vital tool for lowering your property taxes, it is not the only tax break available to Florida homeowners. You may also be eligible for one or more of the following, depending on your circumstances:

Senior Citizens Exception

This is a county-by-county exemption offered solely to persons 65 and older who have resided in Florida for at least 25 years and have income below a particular threshold. If you fulfill these requirements and your house is valued at less than $250,000, you may be eligible for a full exemption.

Disabled Veterans Homestead Property Tax Discount

Any veteran age 65 and older who has an honorable discharge from military service, is partly handicapped with a permanent service-connected disability that is combat-related, and was a Florida resident at the time of joining military duty may be eligible for a homestead property tax credit. The discount is proportional to the veteran's permanent service-connected disability as established by the US Department of Veterans Affairs.

Widow's Exception ($500)

This exemption is available to any widow who is a permanent resident of Florida. The woman is not deemed a widow if the husband and wife divorced before his death. If the widow remarries, she loses her eligibility. When submitting for the first time, you may be requested to present a death certificate.

Widower's Exception ($500)

This exemption is available to any widower who is a permanent resident of Florida. If the husband and wife divorced before she died, the guy is not regarded as a widower. If the widower remarries, he loses his eligibility.

Disability Exemption ($500)

This exemption is available to all Floridians who are fully and permanently handicapped. Suppose you are filing for the first time. In that case, you will need to provide at least proof of disability, such as a certificate from a qualified Florida physician, a certificate from the US Department of Veterans Affairs, or Social Security Administration documents.

Can Florida Property Exceptions Apply If You Own Property In Another State?

In general, Florida property exceptions are not applicable in other states. This implies that Florida residents who own property in other states may be subject to the unique risks that foreign (out-of-state judgments) pose.

If you reside in Florida but own a home in a different state, the judgment creditor can start collection proceedings in the foreign state's court. If the foreign court adopts the state court law that issued the money judgment (also known as the forum state), you will only be granted the asset exemptions applicable in that jurisdiction. For instance, if you're the head of your household, you may not be able to shield your earnings or commissions from wage garnishment commenced in the forum state if the laws of that state provide a similar exemption.

With that being said, as a Florida debtor, you can benefit from a foreign forum state using Florida exemption legislation even if collection action is commenced in the forum state. Bank of America vs. National Financial Services (2016 WL 11735382), an unpublished case, provides a method for asset protection in international collections utilizing Florida exemptions.

In this landmark case, a national bank filed a writ of garnishment in Texas against a Florida debtor's bank accounts maintained at the same bank's Florida branch. Even though the debtor was married, his accounts were titled as joint tenants with survivorship rather than tenants by entireties.

According to Texas law, a writ of garnishment allows the creditor to confiscate the whole account, regardless of the non-interest debtor's spouse's in the joint statement. Texas typically operates under community property laws, whereas Florida recognizes husband and wife as separate property. According to Florida law, the garnishing creditor may confiscate just the debtor's interest in the account, which is thought to be 50% of the entire balance.

The court had to decide whether the creditor's letter of garnishment permitted the creditor to confiscate the whole account (as required by Texas law) or merely half of the account amount (Florida law). The court based its decision on the principles stated in the Restatement of Conflict of Laws. According to Section 132 of the Restatement (Second) Conflict of Laws, a court will generally apply the forum state's law to decide whether a debtor's assets are exempt. However, the Restatement says that where a second state has a dominating interest in the matter, the court shall apply the laws of that state rather than the laws of the forum state.

Since the debtor and their family lived in Florida and the creditor bank had numerous Florida offices, the federal court ruled that Florida law, particularly the state's joint property rules, had a dominant interest in determining how much of the joint bank accounts might be garnished by creditors. Consequently, the non-debtor spouse's fifty percent stake in the bank account balance was shielded from the Texas garnishment writ by the federal court.

In certain situations, it may be possible to arrange an employment connection so that wages are paid and due by Florida businesses, requiring the judgment creditor to file a wage garnishment action in a Florida court, in which case Florida exemptions would apply. However, you should be aware that Florida exemptions usually do not shield your personal property from judgments in other jurisdictions. Unless your assets are domiciled inside the state of Florida, a creditor with a foreign judgment may try to levy on your retirement accounts or tenants by entireties accounts.

A Final Word

While property taxes in Florida can be quite high, the various property exemptions applicable in the state can help you cut down on your property tax obligations significantly. If you plan to leverage these tax breaks, make sure you have the requisite documentation before applying. Finally, remember that Florida property exemptions do not apply to other jurisdictions and may not protect you from wage garnishment if you own property in a different state, even if you reside in Florida.

Interested in learning about becoming a resident in Florida or moving there? Read more.

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