Florida Homestead Law and Exemption Guide

What Is the Homestead Law in Florida?

The Florida homestead laws protect a Florida resident’s primary home from judgment creditors. The Florida Constitution exempts an unlimited amount of equity from forced sale.

The Florida homestead exemption also helps Florida homeowners reduce property taxes and limits annual property tax increases. To qualify, you must own and occupy the property as your permanent residence.

How the Florida Homestead Law Works

The Florida homestead is the most protected asset in the entire country. The purpose of Florida homestead laws is to shield the primary residence of Florida residents so that they do not lose their homes due to unpaid debts.

Florida law protects unlimited amounts of value in the homestead property. To be protected, the lot must be 1/2 or less if it’s located in the city. It must be 160 acres or less if it’s located in an unincorporated county.

Some judgment debtors living in other states will move to Florida to purchase a Florida homestead to protect their hard-earned money from collection by a creditor.

Because the homestead law is found in the Florida Constitution, it is more enduring than any of Florida’s statutory protections that are subject to political changes and legislative repeal. It is harder to convince voters to repeal an important constitutional benefit than to change a state statute through legislation.

Additionally, future laws enacted by the Florida legislature cannot override or diminish exemptions provided by the Florida Constitution.

The transfer of money into a Florida homestead cannot be attacked as a fraudulent conveyance so long as the money used to purchase or improve the home was not originally obtained through fraudulent conduct.

Florida Homestead Requirements

To qualify as homestead in Florida, a property must be a primary residence up to one-half acre in a city or up to 160 acres of contiguous land in an unincorporated area of a county. The contiguous land does not need to share the same legal description or parcel ID number.

If the property is on a lot that exceeds the ½ acre or the 160-acre size limitations, then the homestead protection will be allocated pro-rata to the total property value.

Florida homestead law does not include any restriction on the square footage of the physical residence or the value of the property.

The Florida homestead protection applies only to a natural person’s principal residence in the state of Florida. The property cannot be owned by an LLC, corporation, even if the owner of the business lives in the property.

Homestead property is best protected if the owner’s family uses the property. For example, maintaining children’s playthings or a storage shed on adjacent property improves its protection.

Exceptions to Homestead Protection

There are a few exceptions to what Florida homestead law protects you from. The constitution states that a Florida homestead is not protected from the following debts:

• Liens on the homestead voluntarily given to secure a loan, such as a mortgage to purchase your home or a home equity loan.
• Mechanics liens for goods and services provided to build, repair, or improve your homestead.
• Liens recorded prior to homestead acquisition to secure payment of homeowner association dues and special assessments.
• Property taxes, state taxes, and IRS tax liens.

There are no other exceptions to the homestead exemption listed in the Florida Constitution. In addition, because the state constitution only allows these exceptions, the Florida legislature cannot create additional exceptions to the homestead protection.

Florida Homestead Rules

Here are the requirements for a person to qualify for homestead protection under Florida law:

1. You must intend for the home to be your primary residence.
2. You must live in the home.
3. You must own the home or have a beneficial interest.
4. The property cannot be more than one-half acre if in the city limits or 160 acres if outside the city.

1. You must intend for the home to be your primary residence.

The Florida homestead protection only applies when a person intends for the property to be their primary, permanent residence.

There is no time requirement to form this intent. A person could form an intent to maintain the property as their permanent residence immediately upon moving into the property.

A person can only have one permanent homestead. Therefore, a person who still lives primarily in another state or country cannot form the required intent to qualify for Florida homestead protection. A person may maintain a second residence in another state as long as the Florida house is their primary home.

Homestead protection covers more than just traditional single-family homes. The homestead law protects not only real estate, but also condominiums, stationary houseboats, co-ops, and even long-term leases as long as the property constitutes the debtor’s primary residence.

2. You must live in the home.

A person must occupy and reside in the property in order for it to qualify for homestead protection. In other words, the person must move in with their principal belongings.

This does not mean a person cannot temporarily reside elsewhere. If that were the case, a person would never be allowed to stay in a hotel,  attend school, or stay at a second home for a season. But no matter how long the temporary absence from the property, the owner must intend to return to the homestead as their home.

In the case of a pending judgment, the actual occupation of the property with the intent to maintain it as a primary, permanent residence must occur before a judgment is recorded in the county where the property is located. Otherwise, the judgment could become a lien on the property before the property becomes an exempt homestead.

Do not confuse the Constitutional homestead protection with the homestead tax exemption. Tax exemption rules require you to occupy your home on January 1 and file papers with the county tax assessor or property appraiser. These tax exemption requirements are irrelevant to asset protection of the homestead. Florida residents do not have to file any documents to qualify for homestead protection from judgment creditors.

In addition, there are state income tax principles that require some people to live in Florida more than 180 days per year to avoid income taxation in another state. Florida homestead law does not have a minimum amount of time as an annual residency requirement.

3. You must own the home or have a beneficial interest.

A person must hold legal title to the property to qualify for the Florida homestead protection. Title can be held in your personal name or in the name of your revocable living trust.

A property that is owned by an LLC, corporation, irrevocable trust, or other legal entity cannot qualify for the Florida homestead exemption. This is true even if you are the sole owner of the company.

Florida Homestead Tax Exemption

The Florida homestead exemption provides a property tax break for all types of residences, including single-family homes, condominiums, and mobile homes, that reduces the assessed value of a home by $50,000 and limits annual increases in property tax assessments. Unlike the constitutional protection from creditors, the Florida homestead tax exemption requires an initial filing with the county. The property owner must reside in the home as of January 1 of the calendar year to qualify for the exemption.

The Florida homestead exemption also caps the increase in the assessed value of the homestead equal to 3% or the annual Consumer Price Index (CPI), whichever is less. This cap is otherwise known as the Save Our Homes benefit.

Homestead Exemption Statute

In Florida, the homestead exemption statute is found in section 196.031. The statute specifies that a person who has legal or beneficial title to homestead property in Florida and actually resides in the home as their permanent residence qualifies for a reduction of up to $50,000 in assessed value for property tax purposes.

The homestead statute allows a joint owner of homestead property who lives on the property by themselves to qualify for the exemption so long as the property is owned as tenants by entireties or joint tenants with right of survivorship.

Florida Residency

You must be a Florida resident to qualify for the Florida homestead tax exemption. Residency is a matter of intent. You must occupy a Florida property with the intent to make it your permanent residence.

One common way of establishing intent is to record a Declaration of Domicile with the clerk of the court. The declaration of domicile is evidence of Florida residency, but it alone is not conclusive proof.

History of the Florida Homestead Act

The Florida homestead law began as Florida’s constitutional response to the expiration of the federal Homestead Act of 1862, which granted any U.S. citizen 160 acres of land if they agreed to live on and improve it. The purpose of the federal Homestead Act was to encourage U.S. citizens to expand out west and other underdeveloped parts of the country.

Although the Homestead Act was passed in 1862, its benefits did not apply to people settling in Florida until 1873. But from that time until the Homestead Act was repealed, U.S. citizens could acquire land in Florida from the government in exchange for living on and improving it.

The current Florida Constitution, ratified in 1968, used this same number of 160 acres as a basis for the Florida constitutional homestead protection against forced sale and levy. In other words, the Florida Constitution ensured that those federal grants of up to 160 acres were protected.

Waiting Period Under Florida Homestead Law

There is no waiting period for protection under Florida homestead law. The protection attaches the day of occupancy with the intent to make it the permanent Florida homestead. There are no papers to file, no forms to fill out. There is a Florida statute pertaining to a “declaration of domicile,” which may be filed with a court. Still, this declaration is not required to qualify for homestead asset protection.

Facts showing intent to occupy a homestead permanently, such as your driver’s license and vehicle registration addresses, are more important than a declaration you sign or file with the court.

Proceeds from the Sale of Florida Homestead

Proceeds from the sale of a residence that qualifies as a Florida homestead may be protected after the sale if the debtor demonstrates an intent to reinvest the proceeds in a replacement homestead. However, the judgment debtor must meet several requirements.

First, the debtor must show that they are actively looking for a new home. Also, the debtor must not co-mingle the homestead proceeds with funds from other sources. To keep homestead sale proceeds separate, many debtors deposit homestead money into a new and separate bank account. These accounts are referred to as “homestead accounts.”

There is no express time limit on investing the proceeds into a new Florida homestead. The Florida Supreme Court has only said that “whether funds received from the sale of a homestead are invested in another homestead within a reasonable time must be determined from the facts and circumstances of each case.” Courts have found in some cases that a timeframe of four months to be reasonable, and even one or two years to be reasonable, given the facts of particular cases. However, courts have also found four years and ten years to be too long in some cases.

A debtor should be wary before transferring proceeds from a homestead into other exempt property. In several cases, courts have found that transferring proceeds from an exempt homestead into other exempt assets can constitute a fraudulent conveyance. But courts in other cases have suggested that such a transfer is not fraudulent. For example, in In re Goldberg, a Southern District of Florida bankruptcy case, the court considered a situation where a debtor refinanced his homestead and then transferred the cash from the refinance to his non-debtor spouse. The court held:

The Debtor retained no interest in the funds generated by the loans against his homestead and never had possession of the funds since they were delivered directly to [his fiancée]. Moreover, the Debtor did not sell his homestead. The Debtor merely mortgaged and refinanced his homestead, encumbering the Real Property with liens that must be satisfied upon its sale. Mortgage and refinance proceeds are not the functional equivalent of sale proceeds. Thus, the fact that the Debtor did not reinvest the proceeds or have the requisite intent to reinvest the proceeds into another homestead within a reasonable period of time is irrelevant. The Court finds that no creditor could have forced the Debtor to mortgage his homestead to satisfy its claims. Thus, the Debtor’s creditors were not harmed and there was not, nor could there be, any fraudulent intent on the part of the Debtor.In re Goldberg, 229 B.R. 877 (S. D. Fla. 1998).

The same analysis might apply to the transfer of funds from a homestead refinance or sale.

Fraudulent Conversions Under Florida Homestead Law

A key feature of Florida homestead law is the homestead’s exemption from fraudulent conversion claims brought under Florida’s fraudulent conversion statute. Even after a lawsuit has been filed, a Florida resident can invest unlimited amounts of money in large estate homes and farms and protect the full value of these luxury residences under Florida’s homestead law.

According to a key Florida Supreme Court ruling, a person can convert unprotected, non-exempt assets to their homestead at any time by either buying a new home, improving the home, or reducing the principal balance of an existing mortgage. A Florida resident can always protect their money under the homestead umbrella, even if the asset transfer is designed to protect the money from existing creditors.

There is an exception to the fraudulent conversion protection in cases where the debtor obtained money by deceit, fraud, or other egregious means and then used the money to purchase or improve the debtor’s homestead. A creditor may impose and foreclose an equitable lien on a Florida homestead if the creditor can prove that the debtor obtained money fraudulently or in breach of a fiduciary duty and then invested the same funds in a homestead property.

This does not mean that a monetary civil judgment for common law fraud supersedes the Florida homestead exemption. A debtor’s homestead is exempt from collection of a money judgment founded on fraud or deceit. The equitable lien exception applies only where fraudulently obtained funds were invested in a homestead property. The creditor must trace the funds from the debtor’s fraud into the debtor’s homestead to prevail.

A transferee, or recipient, of a judgment debtor’s fraudulent transfer of assets who subsequently invests the assets received into the transferee’s homestead may be denied homestead protection because the debtor’s transfer was intended as a fraud against creditors.

Advanced Concepts in Florida Homestead Law

Martial Interests

A married person can maintain a legal homestead in Florida even if their spouse is not on the deed to the home. The property remains protected from creditors and the person can qualify for the homestead tax exemption.

Further, the non-owner spouse also has their own separate homestead interest in the property even though the spouse is not on the deed.

To transfer the homestead, the owner will need the signature of the spouse, whether or not the spouse is on the deed itself. The spouse can waive any homestead interest, allowing the property owner to complete the transfer.

Finally, upon the property owner’s death, the spouse residing in the home will have at minimum a life estate interest in the homestead. In other words, the non-owner spouse will have the right to reside in the homestead during their lifetime, even if they were never on the deed to the property.

Protection of Homestead Under Construction or Under Contract

A property is not exempt under Florida Homestead law just because the property owner intends to occupy the property sometime in the future. Property reserved for a future residence cannot be homestead property until occupied. Future homes under construction are not exempt homestead properties. The homestead law requires that the debtor must reside in the property as a primary residence to have homestead protection.

If a civil judgment is recorded in the county where a person owns either a house that they intend to occupy or a lot upon which they are building a future home, the judgment lien will attach to the property. Subsequent occupancy of the home as a homestead will not erase the prerecorded judgment lien.

Therefore, you should not purchase a homestead in any county where a creditor has previously recorded a judgment without careful planning, as the prior judgment may take precedence over your purchase and occupancy of a homestead in that county.

FAQs About Florida Homestead Law

Below are answers to some frequently asked questions about the Florida homestead exemption.

Who can qualify for the homestead exemption in Florida?

Any person can be eligible for the Florida homestead exemption. To qualify, the debtor must be a permanent Florida resident, and the homestead property must be the debtor’s primary place of residence.

Only debtors who are natural persons qualify for Florida homestead protection, so properties titled in the name of corporations, limited liability companies, irrevocable trusts, or partnerships do not qualify as homestead property.

What does it mean to be homesteading in Florida?

Homesteading in Florida means living on a property full-time and using it as a permanent residence to qualify for the state’s homestead exemption. This exemption reduces property taxes and protects the home from creditors under Florida law.

How do you claim the Florida homestead exemption?

For asset protection purposes, nothing needs to be done to claim the exemption. The exemption applies from the time the owner occupies the home with the intent for the home to be your permanent residence. However, people seeking the homestead tax exemption may have certain filing requirements to claim the tax exemption.

What happens to Florida homestead protection after death?

Homestead protection continues after the owner dies. A person’s homestead is not included in probate, and it cannot be liquidated to pay a decedent’s creditors. If the decedent’s heirs or trustees sell the homestead after death, the sale proceeds will pass to the decedent’s probate heirs and trust beneficiaries.

A creditor of the decedent has no additional remedies against the debtor’s homestead after the debtor’s death.

Are mobile homes protected under Florida Homestead Law?

The Florida Constitution’s homestead law does not apply to a mobile or modular home situated on a leased lot. However, Florida Statute 222.05 protects mobile homes from judgment creditors.

The statute provides that mobile homeowners and occupants whose home is on leased land may claim the mobile home as their homestead and exempt it from levy and forced sale.

Can people waive homestead protection?

Florida residents may voluntarily waive homestead protection when they pledge the homestead as security for a mortgage loan. Homestead protection may not be otherwise waived by contract. Waivers of homestead protection in loan documents, other than a mortgage, are unenforceable.

Who can put a lien on your house in Florida?

A creditor with a valid monetary judgment can get a lien on all property you own in the state of Florida. However, your homestead is exempt from forced sale and liens. Exceptions are mortgage liens, tax liens, mechanics’ liens, and HOA liens.