Only One Can Win? Property Tax Exemptions Based on Residency Under Florida Law
Clients want to move to Florida and keep their residency-based property tax exemption afforded in their prior state of residence. Upon moving to Florida, clients inevitably want to know the “trick” or “secret” to keep such residency-based property tax exemption. If the client is single, he or she will not be able to keep his or her residency-based property tax exemption. If the client is married, the “trick” or “secret” is no more than divorce: Florida residents arguably may not have two residency-based property tax exemptions consisting of an exemption in Florida and an exemption in another state. There is one special exception, but in reality, county property appraisers afford applicants this exception only after the applicant has met an extremely high standard of proof. This article highlights that a Florida resident may be entitled to more than one residency-based property tax exemption consisting of such Florida resident’s Florida homestead exemption, coupled with a spouse’s residency-based property tax exemption in another state, where such Florida resident establishes that he or she and his or her spouse are “separate family units.”
The Florida Constitution protects homesteads in three different ways: it provides the homestead with an exemption from taxes1; it protects the homestead from forced sale by creditors2; and it places certain restrictions on a homestead owner from alienating or devising the homestead property.3
Florida provides that a portion of an individual’s homestead is exempt from forced sale by process of any court.4 Further, no judgment, decree, or execution is permitted to constitute a lien on a homestead other than for the payment of: 1) taxes and assessments related to such property; 2) obligations contracted for the purchase, improvement, or repair of such property; or 3) obligations contracted for house, field, or other labor performed on such property.5
The homestead must be owned by a “natural person.”6 The portion of a homestead protected by this exemption will vary depending upon the location of the property. If the homestead is located in an unincorporated area, the exemption will protect up to 160 acres of contiguous land and improvements on such land.7 If the homestead is located within a municipality, the exemption will protect up to one-half acre of contiguous land, and the exemption is limited to the residence of the owner or the owner’s family.8
Florida provides certain exemptions that reduce or otherwise eliminate ad valorem taxes relative to homestead. However, to be eligible for the homestead exemption, the owner must be a permanent resident of Florida and have a present intent of living at the property.9 Additionally, the owner must apply for the exemption.10
Generally, a married couple is entitled to only one homestead exemption.11 However, a married couple may establish separate permanent residences and qualify for a homestead exemption without showing impelling reasons or just ground for doing so if it is determined that separate permanent residences and separate family units were established.12
If one of the spouses resides in another state and receives an ad valorem tax reduction with respect to his or her residence, generally, the spouse living in Florida is not entitled to a homestead exemption for his or her Florida residence. In Collier County for example, the Collier County Property Appraiser’s website notes in italics: “Florida Statutes allow only one [h]omestead [e]xemption per ‘family unit.’ This means that anyone applying for the [h]omestead [e]xemption in Collier County would not be legally entitled to receive the exemption if they or their spouse are receiving residency-based exemption(s) in another state. This includes veterans and senior citizen exemptions.”13 This will not be the case if each spouse is establishing for himself and herself a separate residence, the spouses have no financial connection with one another, and neither spouse is providing “benefits, income, or support” to the other.14 The following cases highlight different varieties of the aforementioned general rules.
Homestead Exemption Granted
• Married Couple Living Separately in Florida Each Entitled to Homestead Exemption by Florida Bankruptcy Court —In Colwell v. Royal International Trading Corporation, 226 B.R. 714 (S.D. Fla. 1998), debtors, husband and wife, sought to exempt real property from creditors’ claims filed in bankruptcy. At the time of their joint bankruptcy petition, the debtors had been maintaining separate residences for the preceding three and a half years. Each was afforded a separate homestead exemption by the state of Florida. A creditor argued that since the debtors were still legally married, only one property could be exempt from creditors.
The court framed the issue as “whether a married couple, living separately for an extended period of time in property deeded in their individual capacities, and on which Florida has conferred individual homestead exemptions, can seek to avoid a creditor’s claims in bankruptcy proceedings.”15 At the time, it was an issue of first impression. Basing its decision on Florida caselaw allowing a wife to acquire a domicile separate from her husband, and despite filing joint tax returns, the court allowed the debtors’ separate Florida homestead exemptions. The creditor could not show evidence that the debtors implemented their living arrangements for the purpose of defrauding creditors.
• Married Couple Living Separately in Florida Each Entitled to Homestead Exemption by Florida State Court for Purposes of Defeating Claim by One Spouse’s Alimony Creditor —In Law v. Law, 738 So. 2d 522 (Fla. 4th Dist. 1999), appellee and appellant were formerly married. The appellant had a judgment against the appellee for support payments. The appellee inherited his mother’s Florida home and claimed it as exempt from his former spouse’s judgment under Florida homestead law. The appellant argued that the appellee should not be entitled to the homestead exemption because the appellee and his current wife owned a Florida home for which they claimed a homestead exemption. The appellee and his wife were separated at the time of the court proceedings. Relying on Colwell, the court ruled that the appellee and his wife could reside in different homesteads where their separation was bona fide and it was the appellee’s intent to reside in his mother’s home. The court noted, however, that although it saw “nothing inconsistent with our public policy if we extend a homestead exemption to each of two people who are married, but legitimately live apart in separate residences, if they otherwise meet the requirements of the exemption,” it indicated that “a husband and wife in an intact marriage cannot have two homesteads.”16 In discussing the word “legitimately,” the court indicated that this meant there was no “‘fraudulent or otherwise egregious act’ by the beneficiary of the homestead exemption.”17
• Married Couple Living Separately in Different States Each Entitled to Residency-Based Property Tax Exemption, Including One Florida Homestead Exemption —In Wells v. Haldeos, 48 So. 3d 85 (Fla. 2d DCA 2010), the Pasco County Property Appraiser challenged a Florida resident’s homestead tax exemption because the resident owned and received a residency-based property tax exemption on property in New York owned jointly with his wife from whom he had been separated. The appraiser argued that a married couple could not receive more than one homestead exemption. The trial court noted, “it would defy logic for two people ‘who have no contact with one another, who don’t have any connections of a financial, emotional or any other way to call them a family unit.’”18
On appeal, the Florida Second District Court of Appeal held that “where the husband and wife have established two separate permanent residences in good faith and have no financial connection with and do not provide benefits, income, or support to each other, each may be granted a homestead exemption if they otherwise qualify.”19 It cited Law and relied on caselaw that indicated a husband’s homestead could be different from his wife’s “‘where their separation was bona fide,’ and it was the intent of the husband to live in his separate home” in making its decision.20
Homestead Exemption Denied
• Family Home in Georgia, Part-Time Residence in Florida: “There Could Be Only One Homestead Claimed by Spouses in an Intact Marriage” —In In re Middleton, 462 B.R. 832 (Bank. N.D. Fla. 2011), the U.S. Bankruptcy Court for the Northern District of Florida did not permit a debtor to claim the homestead exemption. The debtor purchased his residence in Florida in February 1998 in his individual name. At that time, the debtor lived with his wife at their marital home in Georgia. The debtor and his wife claimed to have an intact marriage. Less than 30 days before defaulting on his obligation to a creditor, the debtor conveyed his entire interest in the marital home in Georgia to his wife for no consideration. The debtor claimed that he became a Florida resident in January 1999, but did not claim the homestead property tax exemption under Florida law until February 26, 2007. He admitted to spending about eight days a month in Georgia with his wife. The debtor also held a Florida driver’s license and was registered to vote in Florida. The court also noted:
“Aside from his financial affairs, the [d]ebtor continues to associate himself with Georgia for various social and personal purposes. The [d]ebtor both attends church and receives his primary healthcare in Georgia. He keeps much of his clothing, especially dress clothes, in Georgia. Additionally, when the [d]ebtor’s son was married in 2007, the wedding announcements indicated that the [d]ebtor was a resident of Blakely, Georgia.”21
Neither the debtor nor his wife claimed a homestead exemption in Georgia. The creditor argued that the Florida residence was not the debtor’s permanent residence and the claim of the homestead exemption on the property was an attempt to keep the property from the reach of creditors.
In ruling for the creditor, the court noted that homestead eligibility is:
“[A] fact-based inquiry that largely depends on the intention of the claimant to permanently reside on the property. In 1931, the Fifth Circuit stated that ‘[u]nder the Florida decisions, actual occupancy of a home with intention to remain there and make it the home of the family, the place of their actual use and occupancy, is essential to the homestead right.’”22
The court held that under the totality of the circumstances, the debtor and his family did not intend to permanently reside in Florida. It noted that even though the U.S. Bankruptcy Court for the Middle District of Florida had used a debtor’s Florida address being on the debtor’s voter registration and driver’s license as factors to grant Florida homestead in a related case, the Northern District did not find these factors dispositive under the fact situation presented in Middleton.
The court cited to Law to note that since the debtor and his wife claimed to have an intact marriage, then the debtor could use Florida’s homestead laws as an instrumentality of fraud for purposes of claiming a homestead exemption.
• Two Separate Family Units in Florida Disallowed —In Brklacic v. Parrish, 149 So. 3d 85 (Fla. 4th DCA 2014), rev. den., 157 So. 3d 1041, the appellant purchased a Broward County residence in 1979 and secured a homestead tax exemption on the property. He married in 2001. His wife resided in Palm Beach County and secured a homestead tax exemption on her property. The parties lived apart, but stayed together on weekends and holidays. The parties had separate accounts and monies. The appellant argued that even though he is married, he and his wife established separate family units.
The Florida Fourth District Court of Appeal found that the appellant and his wife were a single-family unit, and appellant had not shown entitlement to a separate homestead tax exemption. The trial court and property appraiser both did not contest the fact that the husband and wife resided in separate permanent residences. The decision came down to the advisory opinions’ consistent emphasis that married individuals can obtain separate exemptions only when they have established separate permanent residences and family units. In the appellant’s case, the court noted that he lived with his spouse for different periods of time. showing support in such an emotional way (as opposed to financial), the court concluded that the appellant and his wife were a single-family unit.
• Florida Homestead Tax Exemption Disallowed Where Homeowner’s Then Spouse Received a Residency-Based Tax Exemption for an Out-Of-State Residence —In Endsley v. Broward County, 189 So. 3d 938 (Fla. 4th DCA 2016), the county property appraiser’s retroactive removal of the appellant’s homestead tax exemption, because her then-husband received a residency-based tax exemption from Indiana during the same time period, was upheld. Additionally, the court upheld the county property appraiser’s reset of the value of the appellant’s Florida property to its market value. The court cited to F.S. 196.031(6) for the proposition that a person is unable to claim homestead exemptions in multiple states: “A person who is receiving or claiming the benefit of an ad valorem tax exemption or a tax credit in another state where permanent residency is required as a basis for the granting of that ad valorem tax exemption or tax credit is not entitled to the homestead exemption provided by this section.”23
The following analysis of the Florida Fourth District Court of Appeal is most indicative on how other Florida District Courts of Appeal might analyze the issue going forward:
“This broad grant of homestead exemptions is limited by the next subsection, which states that ‘[n]ot more than one exemption shall be allowed any individual or family unit or with respect to any residential unit.’ Art. VII, (6)(b).The trial court found that the plain language of the provision meant that only one homestead exemption was allowed, regardless of location. We agree. The meaning of the Constitution’s command that ‘not more than one exemption shall be allowed any individual or family unit’ appears clear on the face of the document. Faced with such unambiguous language, we have no need to turn to complex analysis or employ canons of construction.Nor are we inclined, as [a]ppellant suggests, to rewrite the Constitution to add new terms to this provision. The courts, after all, exist not to re-draft the laws of this [s]tate, but rather to interpret what has been given to us by those tasked with that responsibility. Here, the chosen language is clear, as is our reading of it.”24
The authors called several county property appraisers’ offices25 to inquire about the homestead exemption, based on hypothetical situation in which a client moves from Pennsylvania to Florida, the client is legally separated from his or her spouse, but the client has a residency-based property tax exemption with his or her spouse on a Pennsylvania property. The authors did not ask for any particular clerk in the office; they presented the hypothetical to the first person who answered the phone line. All of those property appraisers’ offices contacted made a similar conclusion as the court in Endsley, e.g., not more than one exemption must be allowed any individual or family unit. Some of the offices were brief and to the point: While not more than one homestead exemption must be allowed, anyone is encouraged to apply for the homestead exemption and each applicant’s circumstances will be weighed based on the information submitted. Most notably was that several of the offices took the time to not only reiterate that anyone is encouraged to apply for the homestead exemption, but also to explain that each applicant should detail his or her specific extenuating circumstances: Are the parties separated? Do they file separate income tax returns? Is there a restraining order? Are all of their monies commingled? The county property appraisers’ offices that had time to go into more detail with the authors noted that if an applicant is truly able to show that he or she is independent from his or her spouse, such applicant may have to sign an affidavit regarding same.
It may be true that a strict reading of the homestead benefits afforded by the Florida Constitution indicates that there is no explicit prohibition against a married couple claiming two separate residences as their respective homesteads. Further, there is no constitutional requirement that a married couple have marital issues or that their marriage not be “intact” to claim a homestead exemption over separate residences. In fact, one less recent Florida attorney general opinion has indicated that “[t]he property appraiser is, thus, limited to a determination of whether separate residences have in law or in fact been established, not whether there are impelling reasons, or just grounds, for the separate residences, and a determination that the property is the permanent residence of the owner.”26 Despite the aforementioned, Florida courts appear to use a facts-and-circumstances test to determine whether to allow Florida homestead exemptions when a homestead exemption has been granted to the claimant in another state. In their initial inquiry, Florida courts look to whether the property in question is the primary residence of the debtor. If the initial threshold is met, the key becomes whether the claimant is establishing for himself or herself a separate residence, the spouses have no financial connection with one another, and neither spouse is providing “benefits, income, or support” to the other. If it can be proven that the spouses are not a “single family unit,” separate homestead exemptions would be appropriate.
In practice, this may come about because a potential client submits a client questionnaire with two residences: one in Florida and one outside of it. The prospective client may have initially claimed more than one residency-based property tax exemption, one for the Florida homestead exemption, and a second for the spouse’s residency-based property tax exemption in another state. It could be that the prospective client did not know the difference, or he or she was not caught. It would be up to the attorney to specifically ask whether the client is claiming more than one residency-based property tax exemption.
The major consequence to receiving two residency-based property tax exemptions is that the Florida homestead exemption for one spouse could be subject to challenge by the county property appraiser or a creditor. The challenge would be successful if the Florida resident could not show that he or she had established a separate permanent residence from his or her spouse. Additionally, if it is found that a Florida homestead exemption was incorrectly granted, the county property appraiser can retroactively remove the exemption.
1 Fla. Const., art. VII, §6(a).
2 Fla. Const. art. X, §4(a).
3 Fla. Const. art. X, §4(c).
4 Fla. Const. art. X, §4.
5 Fla. Const. art. X, §4(a).
7 Fla. Const. art. X, §4(a)(1).
9 Fla. Const. art. VII, §6(a).
10 See, e.g., Collier County Property Appraiser, Homestead Exemption, http://www.collierappraiser.com/Main_Homestead/MainHomestead.html?ccpaver=1707221124.
11 Fla. Const. art. VII, §6(b).
12 F.A.C.R. 12D-7.007.
13 See note 10.
14 Wells v. Haldeos, 48 So. 3d 85, 88 (Fla. 2d DCA 2010). Compare Brklacic v. Parrish, 149 So. 3d 85 (Fla. 4th DCA 2014), rev. den., 157 So. 3d 1041 (even though appellant presented evidence of primary residence different from wife’s and little intermingling of couple’s finances, couple was limited to one homestead exemption, because appellant and wife were not separated and regularly spent time together in same residence).
15 Colwell, 226 B.R. at 718.
16 Law, 738 So. 2d at 525.
17 Id. (quoting Isaacson v. Isaacson, 504 So. 2d 1309 (Fla. 1st DCA 1987)).
18 Wells, 48 So. 3d at 86.
19 Id. at 88.
21 In re Middleton, 462 B.R. at 834.
22 Id. at 835.
23 Fla. Stat. §196.031(6).
24 Emphasis added. Endsley, 189 So. 3d at 941.
25 Specifically, Michael Sneeringer called the property tax appraisers’ offices of Collier, Duval, Hillsborough, Miami-Dade, Monroe, Orange, and Walton counties.
26 Op. Att’y Gen. Fla. 1975-146.
MICHAEL A. SNEERINGER is a senior associate in the Naples office of Porter Wright Morris & Arthur LLP. He is an executive council member of the Real Property, Probate and Trust Law Section of The Florida Bar.
JOSHUA M. BIALEKis a partner in the Naples office of Porter Wright Morris & Arthur LLP. He is board certified in real estate law by The Florida Bar.
This column is submitted on behalf of the Real Property, Probate and Trust Law Section, Debra Lynn Boje, chair, and Douglas G. Christy and Jeff Goethe, editors.