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April 18, 2011

Homestead in Florida

Oftentimes we find that people are unclear as to the various homestead protections enjoyed by residents of Florida. There are three kinds of homestead protection in Florida:

1. Homestead protection in the form of an exemption from taxes found in Article VII Section 6 of the Florida Constitution.
2. Homestead protection from forced sale by creditors found in Article X, Sections 4(a) and (b) of the Florida Constitution.
3. Restrictions on the transfer of the homestead found in Article X section 4(c) of the Florida Constitution.

Each of these provisions play a separate and distinct role in protecting and preserving the family residence.

Where people often get confused about homestead is in determining when each kind of homestead protection can affect their daily lives and how they can go about ensuring that they are taking full advantage of their homestead protection rights under the Florida Constitution.

Homestead protection from taxes is created by contacting your county property appraiser and submitting the required information. Once your request for homestead protection from taxes is processed, you will see the difference reflected in the taxable value portion of your property tax bill.

Homestead protection from forced sale is created by satisfying the following requirements:

• The property must be owned by a “natural person.”
• The person claiming the exemption must be a Florida resident who establishes that he or she made, or intended to make, the real property his or her permanent “residence.”
• The person claiming the exemption must establish that he or she is the “owner” of the property.
• The property claimed as the homestead must satisfy the “size and contiguity” requirements of the constitution (limited to one-half (1/2) acre in a municipality and one-hundred-sixty (160) acres outside a municipality).

If an individual satisfies all of these requirements, then they are generally entitled to seek protection of the homestead from a forced sale to satisfy creditors. However, there are three (3) important constitutional exceptions: taxes and assessments (including homeowners associations); mortgages; and debts incurred to improve the property (contractor’s or mechanic’s liens).

Homestead protection from transfer means that if a husband and wife own the homestead, both of them must sign a conveyance or mortgage transferring or pledging the real estate in order for it to be enforceable against both spouses. Additionally, the Florida Constitution limits how a spouse can transfer the homestead in their will.

Sometimes people with more than one residence ask whether they have to transfer their tax homestead in order to avail themselves of the homestead protection from forced sale by creditors? The answer is no! Transferring your tax homestead has little to no legal bearing on whether you are entitled to claim homestead protection from creditors and may be a bad decision from a tax perspective.

If you have questions about your homestead protections, contact us and get the facts.