Does the Homestead Tax Exemption Automatically Pass to a Surviving Spouse?
The term “homestead” is very confusing under Florida law. There are generally 3 areas of homestead, (1) descent and devise (the rules on distributing the homestead at death), (2) creditor protection and (3) the tax exemption and the corresponding “save our home cap” protection. This blog will address the tax exemption and the “save our home cap”.
Generally, the homestead tax exemption provides homeowners with a reduction in their real estate taxes. The “save our home cap” provides that the increase in the value of your home in calculating the real estate taxes cannot increase more than the lower of 3% or the consumer price index in a year. The “save our home cap” is contingent upon the homestead qualifying for the homestead tax exemption, and the two concepts are intertwined.
In a recent case, Kelly v. Spain, the court determined that when an individual applies and receives a homestead tax exemption, later marries and transfers the homestead to joint names with his or her spouse and later dies, the homestead tax exemption (and also the “save our home cap”) passes to the surviving spouse IF the surviving spouse is using the house as his or her homestead, and EVEN IF the surviving spouse did not affirmatively apply for the homestead tax exemption in the years after the death of the predeceased spouse.
In 1985, Frank applied for and received the homestead tax exemption for his homestead. In 1985, after receiving the exemption, he marries Mary. In 2000, he conveys the house to Mary and himself as tenants by the entireties. Mary never applies for the homestead tax exemption. Frank dies in 2006. From 2006-2011, the property appraiser in Martin County applied the homestead tax exemption and the “save our home cap” protection for Mary.
In May of 2012, the property appraiser learns of Frank’s death (apparently through a petition for summary administration for Frank’s estate). Two months later, Mary is informed that a lien of $283,070.45 has been placed on the house for real estate taxes erroneously exempted from 2007 through 2011, PLUS interest and penalties.
The appraiser argued that when Frank died, the homestead tax exemption died with him and his death created a change in the status of the owner as provided in Section 196.011(9)(a) of the Florida Statutes. Because Mary didn’t file her own homestead tax exemption application she was denied the exemption.
Mary paid the lien and then filed for a refund arguing that Section 193.155(3) of the Florida Statutes provides that there was no change in ownership and should be read “in pari materia” (a fancy Latin way of saying “construed together”) with Section 196.011 of the Florida Statutes.
Section 196.011(9)(a) of the Florida Statutes states that a refiling of an application is required when the property is sold or otherwise disposed of, when the ownership changes in any manner… or when the status of the owner changes so as to change the exempt status of the property. However, Mary argued that this language had to be read in conjunction with Section 193.155 of the Florida Statutes which provides that there is NO change in ownership when title is changed between a husband and wife including a change to a surviving spouse. The statute also provides that a husband or wife will have the benefit of a single homestead application EVEN though only the husband or the wife applies for the homestead exemption.
The court ultimately determined (1) the homestead application filed by a spouse passes to the surviving spouse provided both spouses permanently reside at the homestead and (2) the transfer of homestead property between a wife and husband through survivorship does not constitute a change of ownership. Thus, no renewal of the homestead application was necessary.
ADVICE: While this case turned out favorably for the spouse, I advise surviving spouses or other individuals to affirmatively apply for the homestead tax exemption when there is a change in ownership. It takes a few minutes and it makes clear that you are entitled to the exemption. This case is great ammunition for a battle with the property appraiser, but there were a lot of legal fees and expenses incurred.
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