The Florida Homestead Exemption is a legal provision that protects a Florida resident’s home from creditors and offers property tax savings. The homestead law provides up to $50,000 in tax exemptions, caps annual assessment increases at 3% for eligible homes, and safeguards the property from the majority of judgment creditors. In Florida, the homestead exemption covers single-family homes, condominiums, mobile homes, manufactured homes, and any other type of dwelling.
What Is the Florida Homestead Exemption?
Florida’s Homestead Exemption is a unique benefit for homeowners in Florida. Its primary advantages are:
- Creditor Protection: This feature protects your primary residence from judgment creditors.
- Tax Benefits: If eligible, you can enjoy tax exemptions on part of your home’s assessed value. This can lead to significant annual savings on property taxes.
- Transfer Restrictions: Florida homestead law ensures that homestead property cannot be transferred away from a minor child or a spouse upon the homeowner’s death.
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Property Tax Benefits
Florida residents may also be eligible for property tax benefits under the homestead exemption. These can include:
- Regular Homestead Exemption: The first $25,000 of the home’s assessed value is exempted from all property taxes, including school district taxes.
- Additional $25,000 Exemption: Another exemption applies for the assessed value between $50,000 and $75,000, but this does not include school district taxes.
- Save Our Homes Benefit: A cap on the annual increase in the assessed value of a homestead property.
The law 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.
How the Save Our Homes Benefit Works
Here are the key components of the Save Our Homes benefit in Florida:
- Assessment Increase Limit. The Florida homestead exemption limits the annual increase in a property’s assessed value. Specifically, the assessed value cannot increase more than 3% each year or the percentage change in the Consumer Price Index (CPI), whichever is lower. This is regardless of how much the property’s actual market value rises in that year.
- Base Year Assessment: The year a homeowner first receives the homestead exemption becomes the benefit base year. Subsequent annual increases in assessed value are limited by the cap when compared to this base year value.
- Portability: Introduced in 2008, the portability feature allows homeowners to transfer or “port” the accumulated benefit from the benefit cap (the difference between market value and assessed value) from one homesteaded property to another. This can result in substantial tax savings when a homeowner moves and buys a new primary residence within Florida. However, there’s a limit to the amount of savings that can be ported, and homeowners must apply within a specific time frame.
- Loss of Benefit: If a homeowner loses the homestead exemption, perhaps due to a move or rental of the property, the assessed value of the property may reset to the current market value, effectively eliminating the benefit. However, if the homeowner re-establishes the homestead exemption, the benefit restarts, with the new year becoming the base year for future assessments.
- Additional Structures or Improvements: If a homeowner adds new structures or makes significant improvements to the property after the benefit base year, those additions will be assessed at market value in the year they are completed. But in subsequent years, these improvements will also benefit from the cap.
Eligibility and Filing
To qualify for the homestead exemption for property taxes, you must:
- Be a permanent resident of Florida as of January 1 of the tax year in question.
- Hold legal or beneficial title to the property.
- Use the property as your primary residence.
Application for the tax benefits of the Homestead Exemption typically involves filing an application with the county property appraiser where the property is located. Deadlines and specific requirements may vary by county. Proof of residency is usually required, and may include items such as Florida driver’s license, voter registration, or utility bills.
Florida’s homestead exemption offers one of the most generous creditor protections in the United States. Under Florida law, a homeowner’s primary residence is completely protected from judgment creditors. A recorded judgment does not attach to or become a lien on a debtor’s Florida homestead property. However, this doesn’t apply to all types of debts; secured debts like mortgages and certain types of liens can still be enforced against a homestead property.
To qualify for the Florida homestead exemption from creditors, a person must (1) intend for the property to be their primary residence, (2) reside on the property, and (3) own or have a beneficial interest in the property
1. Primary Residence
The Florida homestead exemption 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 the 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.
A person must occupy and reside in the property in order for it to qualify for the homestead exemption. 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. Legal Title
A person must hold legal title to the property or have a beneficial interest to qualify for the Florida homestead exemption. 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.
Definition of a Florida Homestead
Florida law defines homestead property as a person’s principal residence in the state of Florida of no more than one-half acre of contiguous land in a municipality or 160 acres in an unincorporated county. All contiguous property is included in homestead, even if the contiguous property has separate legal descriptions and tax numbers.
No matter whether the homestead is in the city or the county, there is no restriction on the square footage of the physical residence or the value of the property. If your homestead 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.
The protection from civil creditors in Florida is not limited by the value of the homestead, only by the size of the lot. 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.
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.
Because the Florida homestead exemption is found in the state Constitution, it is more enduring than any of Florida’s statutory protections that are subject to political changes and legislative repeal. Article X, Section 4 of the state constitution states that a judgment creditor cannot force the sale of your homestead to satisfy a creditor’s money judgment. 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.
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.
Required Documentation for Homestead Tax Exemption
Here are the documents you will need to submit when applying for the homestead tax exemption in Florida:
- A valid Florida driver’s license.
- A copy of the recorded deed or tax bill.
- Vehicle registration.
Example of Florida Homestead Exemption
George and Martha live on a one-acre lot in Tampa, Florida. The property is worth approximately $500,000.
The Constitution affords protection only to one-half acre lots in a city. The homestead protection would apply to 50% of the $500,000 value, or $250,000.
George and Martha may not survey the lot, allocate the protected portion to the physical dwelling, and then allocate the unprotected portion to the less valuable backyard. A creditor can record a judgment against the property and force its sale. The creditor would get $250,000 of the sale proceeds applied to its judgment.
Exceptions to the Florida Homestead Exemption
There are a few exceptions to what a homestead protects you from in Florida. 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.
The Florida Homestead Exemption also imposes some restrictions on how homestead property can be alienated or devised upon the owner’s death. For example, if the homeowner is married or has minor children, there are limitations on selling or gifting the property without the consent of the spouse or provisions for the minor children.
Homestead Exemption When House Is in a Trust
You can still qualify for the Florida homestead exemption when your home is owned by a trust. In addition to the normal documentation, you will need to provide either a certificate of trust or certain trust pages. In some counties, you may have to provide the entire trust agreement.
The trust needs to explicitly provide the exemption applicant exclusive right to occupy and possess the homestead property for life. Otherwise, the county will likely deny the homestead exemption. Including proper language in a deed to trust will sometimes alleviate the need to provide the county with a copy of the trust documents.
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Florida Homestead Act
The Florida Homestead Act refers to 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.
Here is the text of the constitutional homestead exemption:
There shall be exempt from forced sale under process of any court, and no judgment, decree or execution shall be a lien thereon, except for the payment of taxes and assessments thereon, obligations contracted for the purchase, improvement or repair thereof, or obligations contracted for house, field or other labor performed on the realty, the following property owned by a natural person:
a homestead, if located outside a municipality, to the extent of one hundred sixty acres of contiguous land and improvements thereon, which shall not be reduced without the owner’s consent by reason of subsequent inclusion in a municipality;
or if located within a municipality, to the extent of one-half acre of contiguous land, upon which the exemption shall be limited to the residence of the owner or the owner’s family.Article X, Section 4, Florida Constitution
Joint Ownership of a Florida Homestead
Joint ownership of a homestead can jeopardize Florida homestead protection when one of the co-owners does not reside on the property. A judgment against the non-resident owner will be a lien placed on the debtor’s interest in the property. A judgment creditor of the non-resident co-owner can force the property to be sold.
For example, assume a married couple adds their child on the title to their homestead for estate planning purposes because they want ownership to pass to the child when the parents die. If the child resides elsewhere, they are not entitled to homestead protection of their interest in the parents’ residence. A civil judgment against the child would become a lien placed on the child’s interest in the home. In that situation, the child’s judgment creditor could levy upon the child’s ownership interest in the parents’ house and force the house to be sold at auction. The auction proceeds would be allocated between the child’s creditor and the parents. The parents would lose their home.
Important: Adding a family member to the title of a homestead can place the home at risk if the family member does not reside in the home.
Waiting Period for Florida Homestead Protection
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 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 for 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. Courts in several cases have found that the transfer of 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 was 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.
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 death of the property owner, 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.
Florida Homestead Protection in Bankruptcy
Florida homestead protection may not apply if the debtor files bankruptcy. Under bankruptcy law, homestead protection is available up to approximately $160,000 unless the debtor occupied their current Florida homestead property, plus any previous Florida homestead properties, for a continuous 40-month period. Joint bankruptcy debtors can protect approximately $320,000 of a jointly-owned homestead. These exemption limits increase from time to time, so debtors must get the current limits from their bankruptcy attorney.
Also, a debtor’s transfer of cash into their homestead within ten years of filing bankruptcy may be challenged by the bankruptcy trustee as a fraudulent conversion if the transfer was intended to defraud creditors. Bankruptcy law does not affect Florida’s unlimited homestead exemption in state court proceedings, including state court allegations of fraudulent conversion into a homestead.
Avoiding Probate of a Florida Homestead
The simplest way to avoid probate of homestead property is to use a lady bird deed, or enhanced life estate deed. A lady bird deed allows the property owner to retain a life estate in the property with full control, use, and enjoyment of the property. Upon the owner’s death, the title to the homestead will go to the holder of the remainder interest (often the property owner’s children). No probate or court proceeding is needed.
Under section 196.031 of the Florida Statutes, the remainder interest should still qualify for homestead creditor protection as well as the tax exemption.
Florida residents can also put their homestead into a living trust, but a lady bird deed is much simpler.
Important Court Decisions
Havoco of America v. Hill, 790 Fla. 1018 (Fla. 2001): No Liability For Fraudulent Conversion in to Florida Homestead
The Florida Supreme Court held that a debtor’s use of non-exempt money to purchase, improve, or pay off debt on a Florida homestead cannot be reversed as a fraudulent conversion unless the money applied to the homestead was obtained through actual fraud or other egregious actions.
The Court said that Florida’s constitutional homestead provisions take precedence over fraudulent transfer remedies enacted by the Florida legislature. Therefore, most judgment debtors can at any time protect non-exempt money by buying a new homestead or paying down a mortgage on existing homestead.
Cooke v. Uransky, 412 So 2d. 340 (Fla. 1982): Florida Homestead Protection Not Available Without Legal Residence Status
The Florida Supreme Court said that a debtor must have the legal right to permanent residency in Florida to claim protection under Florida homestead law. Foreign citizens visiting the state as a tourist or under a temporary visa cannot declare property in Florida as a permanent residence. Therefore, they cannot avail themselves of the homestead exemption benefits under the Florida Constitution. Instead, U.S. citizenship or a “green card” is required.
Hillsborough Inv. Co. v. Wilcox, 152 Fla. 889 (1943): Temporary Absence from Florida Homestead
A debtor may temporarily leave their homestead and reside elsewhere without losing homestead protection if the debtor intends to return to the same property as a permanent residence. This principle permits debtors who work or study outside Florida, and debtors incarcerated for criminal offenses, to retain homestead benefits.
Davis v. Davis, 864 So. 2d. 458 (1st DCA Fla. 2003): Debtor May Conduct Commercial Business on Homestead Property
A Florida resident’s commercial business operated on homestead property located in the county did not disqualify the debtor from claiming protection of the homestead. It does not matter if a portion of the land is rented to a third party.
- In re Oullette 2009 WL 1936896 (Bankr. M.D. Fla. 2009)
- In re Radtke, 344 B.R. 690 (Bankr. S.D. Fla. 2006)
Englander v. Mills, 95 F. 3d 1028 (11th Cir 1996): Allocation of Homestead Exemption Between Exempt and Non-Exempt Part of Debtor’s Residence
Some debtors own a homestead greater in size than the ½ acre homestead lot size limit within cities. The federal appellate court held that the debtor could not allocate the acreage exemption by geography to the most valuable ½ acre upon which the physical house was situated. The entire property must be sold, and the net sales proceeds allocated pro-rata between the debtor and creditors based upon the ratio of the ½ acre size limit over the total lot size.
FAQs About Florida Homestead Law
Below are answers to some frequently asked questions about the Florida homestead exemption.
How do you qualify for 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.
A second home or investment property cannot be considered a Florida homestead.
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 a Florida homestead protect you from?
Florida homestead law protects your house from forced levy and sale by a civil judgment creditor. In other words, if you owe money on a judgment, the creditor cannot take away your home.
There are exceptions to what a homestead protects you from in Florida. The constitution states that 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.
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 a Florida homestead 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.
About the Author
Jon Alper is an expert in asset protection planning for individuals and small businesses.
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