Florida Homestead Exemption: What You Need to Apply
If you elect to purchase a residence in Florida, as opposed to renting, the positive result of changing your residence to Florida is that you may claim the Florida homestead exemption. In Florida, the homestead exemption accomplishes 2 things:
- It reduces the value of a home for assessment of property taxes by $50,000, so a home that was actually worth $500,000 would be taxed as though it was worth only $450,000 (although $25,000 of homestead coverage does not apply to the school portion of property taxes).
- It limits increases in the assessed value of a home to the lesser of 3% or the rate of inflation.
There are additional benefits available to taxpayers over age 65, but most apply only to taxpayers with very limited income.
Claiming a Florida homestead exemption involves some very specific requirements that must be completed within a specified time frame and which, of necessity, must be completed in a certain order. For example, Lee County (Cape Coral and Ft. Myers) requires a homeowner to own and occupy the residence as of January 1 of the year in which the application is made (although the application may be filed as late as March 1). The forms are available from each County's Property Appraiser's Office, and can be found on the internet. When applying, the homeowner must present:
- A valid Florida driver's license. If you're planning to claim a homestead exemption, you must first apply for a Florida driver's license. A Florida I.D. Card may be used in lieu of a driver's license if the homeowner does not have a driver's license. Florida will recognize a Michigan driver's license as justification for issuing a new Florida driver's license without an exam (except a visual acuity test) or a road test, often for a much longer time than the remaining duration of the Michigan license. However, Florida has extensive identification requirements, including a certified copy of a birth certificate or a valid passport. You should carefully review the requirements for your county online.
- Either a valid voter's registration or a Declaration of Domicile, reflecting the homeowner's Florida address. If the homeowner is planning to register to vote in Florida – which is recommended – this again requires some advance planning. Registration can be accomplished online.
- At least one of your automobiles must be registered in Florida. In order to do this, you must have insurance for that vehicle from a company doing business in Florida. A small side benefit which might cause you to consider registering all of your vehicles in Florida is that premiums are much lower in Florida than in Michigan. Unfortunately, the first Florida license plate you obtain for each vehicle requires payment of a one-time $250 charge.
- Proof of ownership of your property in the form of a copy of a tax bill or your deed. In many cases, particularly if you have owned the residence for a while and are applying for the homestead exemption online, the Appraiser's office will have a record of your ownership of the property. If you hold the title in trust, you may be required to furnish a Certificate of Trust as well. If you hold title (or plan to hold title) in a trust, it may be necessary to amend the Trust to include a homestead paragraph indicating that the grantor and/or his or her spouse, if any, has/have the exclusive and continuous present right to full use, occupancy and possession of the homestead residence for life. Without this provision, a homestead exemption may be denied by certain assessors. Including certain language in deeds transferring a Florida residence into a trust may avoid the need to later furnish a Certificate of Trust when applying for the homestead exemption. An attorney – preferably an attorney knowledgeable about Florida requirements - should be consulted prior to entrusting your real estate to avoid any unnecessary complications.
- Your application for exemption may be provisionally denied until you can furnish a form (supplied by the Appraiser's office) signed by the Assessor in any other county in which you own residential real estate that you are not claiming a homestead exemption for that property. A copy of the request to rescind your Michigan personal residence exemption will not suffice, since there is no proof that the municipality in fact rescinded the exemption.
Fortunately, once you've taken all of these steps, it shouldn't be necessary to take them again. Just keep telling yourself "I'm doing this for a [tax saving] reason" as you slog through the bureaucracy.
Have questions? Our Estate Planning Practice Team includes two attorneys licensed to practice in Florida, as well as Michigan. Contact us if you have questions about the Florida Homestead Exemption.
You May Also Be Interested In
- Estate Planning Blog Post, August 12, 2019
- Treasury Delivers Early Holiday Present: Proposed Anti-Clawback Rule Protects Gifts Made from 2018-2025Estate Planning Advisory, December 10, 2018
- Estate Planning Advisory, December 11, 2017