Florida vs. Texas Homestead Protection

Florida and Texas offer the two strongest homestead exemptions in the United States. Both states protect an unlimited dollar value of a homeowner’s primary residence from judgment creditors, and both ground their protections in the state constitution rather than statute. But the two systems differ in important ways that matter for asset protection planning, particularly regarding acreage limits, fraudulent conveyance treatment, bankruptcy rules, sale proceeds, creditor exceptions, and property inherited after death.

Unlimited Value Protection

Both states protect homestead property without any dollar cap on value. A Florida homeowner with $10 million in equity receives the same protection as one with $100,000 in equity. The same is true in Texas. This unlimited value protection is what sets both states apart from the vast majority of jurisdictions, where homestead exemptions are capped at amounts ranging from a few thousand dollars to a few hundred thousand.

The unlimited protection in both states is constitutional rather than statutory, which makes it extremely difficult to change. A statutory exemption can be amended or repealed by the legislature. A constitutional provision requires a public referendum or constitutional convention.

Acreage Limits

The first major difference is the amount of land each state protects. Florida protects up to one-half acre within a municipality and up to 160 acres in an unincorporated area. Texas protects up to 10 acres in an urban area and up to 100 acres for a single adult or 200 acres for a family in a rural area.

For homeowners in a city or suburb, Texas is significantly more generous. A homeowner on a five-acre lot within city limits in Texas retains full protection, while a Florida homeowner on the same lot in a municipality would lose protection for the acreage beyond one-half acre. For rural properties, Florida protects more land (160 acres versus Texas’s 100 or 200), though in practice this difference affects a smaller number of homeowners.

Fraudulent Conveyance Protection

This is the area where Florida offers a decisive advantage. The Florida Supreme Court held in Havoco of America, Ltd. v. Hill, 790 So.2d 1018 (Fla. 2001), that a debtor’s investment of non-exempt assets into a Florida homestead cannot be reversed as a fraudulent conveyance, even if the investment was made with the intent to place the money beyond the reach of creditors. The Court reasoned that the homestead exemption is a constitutional right that supersedes the fraudulent conveyance statute, and that creditors cannot complain about the conversion of non-exempt assets into an exempt homestead because they have no right to the exempt property.

The only exception recognized by Florida courts is money obtained through fraud or other egregious conduct. Under the Havoco framework, ordinary judgment creditors cannot undo a debtor’s strategic decision to move cash into homestead equity.

Texas does not provide the same protection. Texas courts have held that a debtor who converts non-exempt assets into homestead property with the intent to defraud creditors may be subject to an equitable lien or a fraudulent conveyance challenge. While Texas case law is not uniform on this point, the risk that a last-minute conversion will be reversed is significantly higher in Texas than in Florida.

For asset protection planning, this distinction is critical. A Florida resident facing a lawsuit can pay down a mortgage or purchase a more expensive homestead using non-exempt funds, and the conversion is generally protected. A Texas resident making the same move faces meaningful legal risk.

Bankruptcy Treatment

Federal bankruptcy law imposes additional limitations on homestead exemptions that affect both states, but the impact differs.

Under 11 U.S.C. § 522(p), if a debtor acquired homestead property within 1,215 days (approximately three years and four months) before filing bankruptcy, the exemption is capped at approximately $189,050 for any value attributable to non-exempt property that the debtor converted into homestead equity during that period. This cap applies regardless of the state exemption amount. Both Florida and Texas homeowners are subject to this federal cap in bankruptcy.

Additionally, under 11 U.S.C. § 522(o), if a debtor transferred non-exempt assets into homestead property within ten years before filing bankruptcy with the intent to hinder, delay, or defraud creditors, the exemption is reduced by the amount of the fraudulent conversion. This provision can significantly reduce the homestead exemption in both states when the debtor files for bankruptcy.

Outside of bankruptcy, however, Florida’s Havoco protection applies in full. A Florida debtor who converts assets into homestead and does not file bankruptcy retains the full benefit of the conversion. This makes Florida’s homestead more powerful in state court proceedings than in federal bankruptcy court.

Sale Proceeds

When a homeowner sells a homestead, the treatment of the sale proceeds differs between the two states. In Florida, sale proceeds remain exempt from creditors if the homeowner intends to reinvest the proceeds in a new Florida homestead within a reasonable period of time. There is no statutory deadline, but the debtor must demonstrate a genuine intent to reinvest and must not commingle the proceeds with non-exempt funds. Florida courts have generally been flexible in defining what constitutes a reasonable reinvestment period.

Texas provides a more defined rule: sale proceeds are exempt for six months after the date of sale, after which the protection expires. If the homeowner has not reinvested the proceeds in a new homestead within six months, the funds lose their exempt status and become available to creditors.

Florida’s approach is more protective because it does not impose a hard deadline, though it requires the debtor to maintain a demonstrable intent to reinvest.

Creditor Exceptions

Both states exempt the homestead from most judgment creditors but recognize similar categories of exceptions. Mortgages, property tax liens, and mechanic’s liens can result in forced sale of a homestead in both Florida and Texas. Both states also recognize that the IRS can place a federal tax lien on homestead property under the Supremacy Clause.

Texas recognizes additional exceptions not found in Florida law. Texas permits forced sale of a homestead to satisfy a home equity loan (subject to specific constitutional requirements), an owelty of partition imposed by a court in a divorce proceeding, and certain property tax loans. Texas also allows a homestead to be attached for debts arising from criminal conduct, including fraud. Texas courts have refused to extend homestead protection to shield the proceeds of criminal activity.

Florida, by contrast, has been more protective in the context of criminal proceeds. The Florida Supreme Court held in a 1992 decision that the Florida Constitution does not create an exception for criminal proceeds. While this principle has been tested and narrowed in subsequent cases, Florida’s homestead remains more resistant to claims based on the homeowner’s misconduct than Texas’s.

Homestead After Death

Both states extend homestead protection to the surviving family after the homeowner’s death, but the mechanisms differ. Florida’s constitution provides that the homestead exemption inures to the surviving spouse or heirs and imposes restrictions on how the homestead can be devised. A Florida homeowner cannot devise homestead away from a surviving spouse or minor child except in limited circumstances.

Texas provides that the surviving spouse or minor children have the right to occupy the homestead for as long as they choose to use and occupy it, even if the property is not left to them by will. Texas law also provides that the homestead descends and vests as other real property, subject to the surviving spouse’s or children’s right of occupancy.

Both systems protect the family home after the homeowner’s death, but the specific rules governing devise, descent, and spousal rights differ in ways that affect estate planning.

Which State Is Stronger?

For pure asset protection purposes, Florida offers the stronger homestead exemption. The key advantages are the fraudulent conveyance protection under Havoco, the more flexible treatment of sale proceeds, and the broader resistance to claims based on criminal conduct. These features make Florida’s homestead a more reliable planning tool for individuals who are converting assets into homestead equity as part of a deliberate asset protection strategy.

Texas’s advantages are its larger urban acreage limit and its additional creditor exceptions, which may be relevant for homeowners on larger lots in cities. But for a homeowner choosing between the two states for asset protection purposes, Florida’s combination of unlimited value protection, constitutional fraudulent conveyance immunity, and liberal judicial interpretation makes it the more attractive jurisdiction.

Both states offer homestead protection that is far superior to any other state in the country. The differences between them are significant for planning purposes but should not obscure the central point: either state provides a level of homestead protection that most jurisdictions do not approach.