Homestead Property And Probate In Florida
Florida estate planning offers a number of opportunities to take advantage of the many ancillary benefits afforded by the homestead exemption Florida provides for property designated as a homestead. In addition to reduced property tax liability, these properties typically enjoy protection from creditors both during the original homeowner’s lifetime and through the probate process that follows. However, certain procedures must be followed in homestead probate to ensure that the homestead benefits efficiently transfer from one owner to the next. Schedule a consultation with Loughlin Law, P.A. to discuss your homestead probate concerns. Call 561-559-6214 today.
Homestead Property Protections in Florida
There are three main types of protection Florida law affords to property designated as a homestead. The first is the limited homestead exemption Florida allows for property taxes on certain portions of a home’s value. The other two depend on this first protection because they rely on the initial designation of real estate property as a homestead, which is carried out through the county property appraiser’s office in order to get the property tax exemption.
Establishing a Homestead Property in Florida
Florida law allows for a number of protections on – but also applies a few special restrictions to – property designated as a “homestead.” Generally speaking, property may be eligible for homestead provisions if it is either of the following:
- The homeowner’s primary residence
- The primary residence of one of the homeowner’s legal dependents
Legal dependents are likely to be members of the same household of the person who “claims” them, so for practical reasons the first of these scenarios is encountered more often than the second.
Claiming Property as a Homestead
Although only an individual’s primary residence (or that of a dependent) may be claimed as a “homestead” property in Florida, it does not follow that all primary residences in Florida are counted as homesteads. To claim the property as a homestead, the homeowner must file Form DR-501 with the office of the property appraiser in the county where the home is located, no later than March 1 of the year in which the individual wishes to establish the property as a homestead.
Homestead Exemption Florida Property Tax
If the application submitted via Form DR-501 is found to meet the state’s legal requirements for a valid homestead property, the provisions of the Florida Homestead Property Tax Exemption will be applied. The exemption’s “skip” structure is not necessarily intuitive, but in combination with some of Florida’s rules regarding the valuation of property at a change of ownership it can have important implications for estate planning. Briefly, an approved homestead property tax exemption applies as follows:
- The first $25,000 of the property’s appraised value are exempt from all property taxes
- The property’s value between $25,000 and $50,000 receives no property tax exemptions
- The value of the property between $50,000 and $75,000 is exempt from non-school property taxes
- All value over $75,000 is subject to full property taxes in the respective jurisdiction
Property tax liability is based on the home’s value as of January 1 of the year for which the tax is assessed.
Save Our Homes Assessment Limitations
The Save Our Homes (SOH) Assessment Limitation becomes active after the first year of homestead exemption, so this benefit is dependent upon first getting an approved homestead property tax exemption and a “just value” appraisal from the office of the county property appraiser. From that point, and for the duration of the time the homestead property remains in the homeowner’s possession, the taxable increase in assessed value cannot exceed the lesser of
- Three percent of the previous year’s assessed value
- The year-over-year percentage of increase in the Consumer Price Index (CPI)
Over time, assuming that property values overall increase at a rate greater than three percent, the gap between the assessed value on which the homestead property is taxed and the “just value” of that property on an open market constitutes what is known as the “Save Our Homes” benefit (often abbreviated as the “SOH benefit”). This benefit continues to accrue over the life of the homeownership, and under certain circumstances may even be transferred to a new homestead property if a Florida homeowner moves within the state, according to the Florida Department of Revenue.
The circumstances under which the SOH benefit can be transferred along with the homestead property itself can be complicated to navigate. If you are preparing your estate plan to pass on homestead property, or you are attempting to navigate Florida homestead probate rules, you may wish to consider consulting with an attorney at Loughlin Law, P.A. regarding your options for limiting property tax liability going forward.
Protection From Creditors
The third major protection applied to homestead property in the Sunshine state is another type of homestead exemption Florida homeowners can use to preserve their family homes not only throughout their own lifetimes but potentially across multiple generations. Irrespective of the property tax benefits attendant upon Florida homestead property, one of the most important advantages of establishing one’s primary residence as a Florida homestead is the ability to protect the property from creditors not only throughout the homeowner’s lifetime, but during the probate process.
As long as the home is owned outright (not subject to mortgage or lien) and the proper procedures are followed, then normally a homestead property can be passed directly to the estate’s heirs, and will be protected from creditors’ claims filed against the estate. However, just as a homeowner must submit an application to secure their right to a homestead property tax exemption, heirs must file a Petition to Determine Homestead in order to secure the homestead probate protections. Certain restrictions may apply to who can inherit while maintaining the homestead status, so consider speaking with a Florida estate planning attorney to discuss the specifics of your situation.
Consult With an Attorney in Palm Beach County Today
Navigating the homestead probate rules to ensure that the homestead exemption Florida currently applies to a home’s property tax liability remains intact throughout the probate process can raise a number of questions and complexities. A Florida estate planning attorney experienced in handling the transfer of homestead property during probate may be able to offer you practical guidance. Call Loughlin Law, P.A. today at 561-559-6214 to schedule a consultation.
