Can You Save Real Estate Taxes on More Than One Homestead?

The homestead tax exemption gives Florida residents a favorable real estate tax break and more importantly the “save our home cap” advantage. I recently wrote about this on a prior blog. While the real estate tax break may not be a huge amount of money, the “save our home cap” advantage can save a great deal of money.

For example, assume Doris purchased her homestead in 1980 at a value of $50,000, at which time the real estate tax bill, with the homestead tax exemption, was $200. Under current Florida law, the value of a Florida homestead, on which real estate taxes are calculated, can only increase annually by the lesser  of 3% or the adjustment in the Consumer Price Index. This “save our home cap” was enacted to help homeowners stay in their home when high inflation would increase the value of the homestead and the increased real estate taxes would make the homestead not affordable for the home owner. Prior to the real estate collapse in 2008,  this cap was a huge benefit in the era of increasing values. This cap will continue to be a benefit as the market rebounds.

Assume Doris dies in 2016 and the value of her homestead is now $1 million. At Doris’ death the “save our home cap” comes off and her heirs now have to pay real estate taxes based on a value of $1 million instead of based on a value of $50,000 plus the annual 3% increase! Exceptions are provided when there is a surviving spouse and certain transfers during lifetime to family members.

What happens when husband and wife are one family unit but live in 2 separate homesteads and claim the homestead tax exemptions for both homesteads?

In Endsley v. Broward County, husband and wife owned real estate in Indiana and Florida. Beginning in 1986, they transferred the Indiana property to husband, and he  claimed an Indiana residency based homestead tax exemption. At the same time they transferred the Florida property to wife, and she claimed a Florida residency based homestead tax exemption in Broward County, Florida.

The property appraiser in Broward County found out about the “double” homestead tax exemptions and removed the homestead tax exemption (and accordingly the “save our home cap” advantage) for the Florida homestead from the period 1996-2005 (it is unclear what happened to the years 1986-1996 but, perhaps because the statute of limitations ran on such years, the property appraiser did not address those years.).

In 2007, the wife was granted the homestead tax exemption again because husband cancelled the Indiana homestead tax exemption. However, the value of the Florida homestead was set to the fair market value in 2007, rather than the lower value if the “save our home cap” had stayed on the Florida homestead.

Under Section 196.031(5) of the Florida Statutes, a person claiming a tax exemption in another state where permanent residency is required as a basis for obtaining such exemption, is NOT entitled to homestead exemption as provided under Florida law.  Further,  Article VII, Section 6(b) of the Florida Constitution provides that not more that one exemption shall be allowed any individual or family unit. Thus, a “harmonious family unit”, even if living apart cannot claim more than one homestead tax exemption. Brklacic v. Parrish. It was undisputed that husband and wife were one family unit, unlike separate family units as discussed in Wells v. Haldeos, where 2 separate homestead tax exemptions were allowed.

Wife argued that the statute was unconstitutional and only applies to family units who own two residences in the state of Florida. The court determined that the statute was constitutional and she was denied her Florida homestead tax exemption for those years and the “save our home cap” came off and the fair market value was reset to 2007 values.

ADVICE: If you are claiming a homestead tax exemption in another state, then do not assume that Florida will not find out if you are also claiming the homestead tax exemption in Florida. If the homestead is denied in Florida, then you will be facing back taxes, penalties and interest. Apply the statute correctly. If you are currently claiming 2 homestead tax excemptions, then consult with an attorney before you discuss any matter with the county property appraiser.

WORD OF THE WEEK: a dispute resolution process in which an impartial third party or mediator assists the parties to voluntarily reach a mutually acceptable settlement. The mediation is totally voluntary between the parties and the mediator merely guides them to reach a settlement. Mediation can often save time and money as the process can avoid contentious and drawn out litigation.


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