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Florida’s homestead exemption on property taxes allows people who permanently live in the state to exempt up to $50,000 of a property’s value from tax assessments. This exemption isn’t available to investment properties, so homeowners who plan to rent their residence must meet several standards to avoid losing the exemption.
Florida’s homestead exemption applies to anyone who purchases a home and plans to make it his permanent residence, which Florida law defines as a residence the owner will use as his principal home with intent to return to it whenever he leaves. Homeowners must apply to their county assessor for exemption by March 1 of the tax year for which they wish the exemption and may only claim the exemption if the property is their permanent residence or the permanent home of one of their dependents.
Because the exemption isn’t intended to provide investment property owners with tax relief, a home that’s converted from a residence into a rental property loses its homestead exemption. Florida law allows an exemption to be granted to a property if the owner lives in it on Jan. 1 of the tax year, regardless of how long the property is rented out starting Jan. 2. There’s a caveat to this loophole, though: Homeowners can’t claim it for two consecutive years.
Florida law doesn’t heed how long a property is rented when it determines if the owner is entitled to the exemption. Instead, the only qualifier is if the owner lives in the property on Jan. 1 and applies for the exemption that year. Because of this, a “snowbird,” a property owner who lives in the state during the winter, can receive the homestead exemption every other year if he doesn’t remain in his home on a year-round basis, although he’ll need to be living in the property on Jan. 1 of the year he wishes to claim the exemption.
Florida law only withdraws the homestead exemption if the property owner rents the entire dwelling. In previous decisions, such as Haddock v. Carmody, the court determined that merely leaving possessions in a locked closet doesn’t preserve the owner’s homestead exemption because of the “entire dwelling” construction of the law. However, leaving a significant amount of personal property in locked rooms while renting out most of the property may establish intent to return to the property in defense of abandonment charges, according to the “Florida Bar Journal.”
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