What is a Homestead Exemption in Florida?
An encyclopedic definition is
The Homestead exemption in Florida may refer to three different types of homestead exemptions under Florida law:
- 1) exemption from forced sale before and at death per Art. X, Section 4(a)-(b) of the Florida Constitution;
- 2) restrictions on devise and alienation, Art. X, Section 4(c) of the Florida Constitution;
- 3) and exemption from taxation per Art. VII, Section 6 of the Florida Constitution.
Florida’s homestead exemption providing an exemption from forced sale before and at death are among the most protective in the United States as it provides “no limit” to the value of certain real property that can be protected from creditors. The property tax exemption clause of Article VI renders property tax-free to the extent of certain dollar amounts in the value of the homestead.
Sounds confusing, yes? The long and the short of it all is that this is one of many great reasons to buy a home and reside in Florida. The State of Florida’s constitution provides for a $25,000 exemption, which is deducted from a property’s assessed value if the owner qualifies. One must timely file by March 1, (you can do this by mail.) possess title to the home, and be a Florida resident living in the home. Properties granted Homestead Exemption also automatically receive the “Save Our Homes”, benefit. “Save Our Homes” limits any increase in assessed value of properties with the Homestead Exemption to 3%. The Florida Homestead exemption caps the rate at which property assessments may be increased annually. Though millage rates may increase over time, the assessed value a house with a Homestead exemption is fixed. For example, if you purchased a home assessed at $100,000 in 1995, followed the Homestead filing guidelines, and the exemption was still valid in 2005, the most the home could be assessed at is approximately $126,000.
Another great feature of Florida’s Homestead exemption is that it attaches to proceeds from the sale of a home with a Homestead exemption, if the homeowner intends to use those proceeds to establish a new Florida Homestead. Therefore, if the owner of a $1,000,000 home sells that home and puts the money in his bank account, that money is still protected by the Homestead exemption, so long as the homeowner purchases another home in Florida of like kind or increased value, and is entitled to the exemption.
When ownership of a Homestead property is changed in any way, affecting the Homestead (i.e. when you sell it), the assessed value then returns to fair market (just) value in the year following the change to the new owner. If you decide to buy and upgrade to a larger home, you fall under ‘Save Our Homes – Portability”. You must transfer the Save Our Home benefit difference from the previous Homestead exemption within two (2) years in order to ‘take it with you’.
In addition, there are other ‘exemptions’ and benefits stemming from the original ‘Homesteading’ of your property.
Additional $25,000 Homestead Exemption: All persons receiving the standard Homestead exemption who continue to qualify for that exemption automatically qualify to receive the additional Homestead exemption. No further application is necessary. The additional $25,000 exemption applies to taxable values greater than $50,000 and up to $75,000.
Widow‘s/Widower’s Exemption – $500: A widow or widower who is a permanent Florida resident may claim this exemption.
Disability Exemption – $500: In addition to Florida residency, proof of total and permanent disability must be provided.
Veteran’s Disability Exemption – $5,000: In addition to Florida residency, you must provide proof of 10% or more war-time disability from the Veteran’s Administration.
Creditor Protection: Florida’s creditor protection Homestead provision is one of the broadest in the Uunited States. With three exceptions, the Homestead exemption offers virtually absolute protection from a forced sale of your property to meet the demands of your creditors. O. J. Simpson is a famous example of someone who managed to profit from this ‘loophole’ , by buying and ‘Homesteading’ his property in Florida. Property taxes, mortgage providers and mechanics’ liens are the three exceptions to this provision..