Florida Homestead Exemption Advantages
The obvious advantages to residing in Florida is the weather and no state income taxes. Another lesser known, but equally as important, advantage is Florida’s homestead laws.
“Homestead” can be a deceptively complex issue in estate and tax planning when individauls finally decide to become Florida residents, including asset protection, property tax savings, and restrictions on the estate plan.
Florida’s asset protection for homesteads is anchored in the state’s constitution (Article X, Section 4). Homestead property owned by a natural person is protected from forced sale under process of any court or judgment lien (except for obligations relating to the real estate itself, such as property taxes, mortgage principal and interest, and contractors’ liens).
The asset protection for homestead includes land and improvements on the land, with an acreage limit of up to 160 contiguous acres outside a municipality, and one-half acre inside a municipality.
Florida also offers two sorts of property tax savings for homestead property: (1) the “$50,000 exemption“ and (2) the “Save Our Homes” limit on annual property tax increases.
The “$50,000 exemption” is a reduction of up to $50,000 in the assessed value of the homestead property. A homeowner can apply for this exemption by filing a Form DR-501 at the county appraiser’s office.
The $50,000 homestead exemption is helpful as far as it goes, but it doesn’t go very far. The “Save our Homes” advantages for homestead property approved by Florida’s voters as a constitutional amendment in 1992 are much more economically significant. ” Save our Homes” limits annual increases in property assessments to the lesser of 3% or the annual increase in the Consumer Price Index. Over time, especially when Florida’s real estate market is appreciating, annual “Save Our Homes” advantages can be substantial.