Orlando’s Homestead Exemption and Estate Planning: What to Know

What Is a Homestead in Florida?

A homestead in Florida is defined under Article X, Section 4 of the Constitution. This law protects homeowners from forced sale of a home by judgment creditors. Because it is part of the Constitution, Florida homestead law is more enduring than the statutes, which are subject to political changes. Any future laws enacted by the legislature cannot diminish or override the exemptions provided.

A homestead property must be a person’s principal place of residence. The law protects unlimited value in a homestead property, with the only limitation being lot size. The extent of a property that qualifies as a homestead depends on where it is located:

• If located within a municipality, a homestead may include up to one-half acre of contiguous land, and the exemption will only apply to the residence of the owner or his or her family. 
• If located outside of a municipality, a homestead may include up to 160 acres of contiguous land and any improvements on it.

Property is best protected when in use by the owner or their family. Homestead protections currently apply to single-family homes, manufactured homes, condominiums, co-ops, stationary houseboats, mobile homes, and long-term leases if the property is the primary residence. 

What Is the Florida Homestead Exemption?

The law on exemption of homesteads can be found in the Florida Statutes at §196.031. It provides for a break in property taxes based on the assessed value of the home. A homeowner in Florida may receive a homestead exemption of up to $50,000, of which the first $25,000 is exempt from all property taxes. As Florida homesteads are not subject to probate, homestead laws can play an important role in estate planning.

Florida homestead exemptions are calculated based on three distinct property valuations:

• Just value: The market value of the property is called its just value. 
• Assessed value: This is the just (market) value of the property without assessment limitations.
• Taxable value: This figure is the assessed value of the property minus exemptions. It is used to calculate taxes due. 

What Are the Requirements for a Florida Homestead Exemption?

To be eligible for the homestead exemption, you must meet three requirements:

• Primary residence: The property must be intended for the owner’s primary residence. There is no time requirement for this intent. You could form the intent on the same day when you move into the property. As you can only have one permanent homestead, you will not meet the intent requirement if you live primarily in another state or country. Provided the Florida property is your primary residence, you can maintain a second home in a different state.
• Occupancy: To qualify for homestead protection, you must occupy and reside on the property. It must contain your principal belongings, and you must live there. You may temporarily reside elsewhere, but you must intend to return to the homestead property as your permanent home. The property must not have been rented out for more than 30 days of any given calendar year. Actual occupation with intent to maintain the property must occur first, or a judgment recorded in the county where the property is located could place a lien on the property before it qualifies as an exempt homestead. For a tax exemption, you must have lived at the property on January 1st of that tax year and must file with the county tax assessor or property appraiser. To qualify for protection from judgment creditors, you are not required to file any documents. 
• Title: To qualify for homestead protection, you must hold legal title to the property. The title can be in your name or your revocable living trust. If the title is held in trust, you may need to provide a Certificate of Trust. 

How Can You Keep a Homestead Out of Probate Court?

A simple way to avoid probate of a homestead property is to use a “lady bird deed,” also known as an enhanced life estate deed. This allows the owner to retain a life estate in the property with full use, enjoyment, and control. After the owner’s death, the property passes to the holder of the remainder interest, usually an heir of the owner, with no probate proceedings required. The remainder interest should still qualify for homestead tax exemption and creditor protection under the law. Another more complicated option is to transfer the homestead into a living trust. 

Are There Exceptions to Homestead Protection?

As stated in the Constitution, a Florida homestead is not protected from certain types of debts. These include the following, which are the only exceptions allowed under the Constitution:

• Liens on the property voluntarily offered to secure a mortgage, home equity, or other loan
• IRS tax liens, state taxes, and property taxes
• Mechanics liens for services and goods provided to build, improve, or repair the homestead
• Liens recorded before the homestead was acquired to secure special assessments and homeowners association dues

Skilled Legal Guidance with Estate Planning and Homestead Exemptions

At The Law Office of Erin Morse, we have an in-depth understanding of the regulations, statutes, and constitutional law related to homestead exemptions, taxes, probate, trusts, guardianship, business succession, and other estate planning issues. We can help you create an estate plan or modify an existing plan to ensure your assets are distributed as efficiently as possible, according to your wishes. Contact us today at (407) 743-6059 to speak with an experienced Orlando estate planning lawyer.