The term Homestead property is thrown around quite a bit in the real estate industry and some agents have told me it is a bit confusing. So I wanted to give everyone a brief over view because the term can mean different things depending on the context in which it is used. The term Homestead can refer to three different areas under Florida law:
1. Protection of the primary home from creditors;
2. Property tax exemptions for primary homes; and
3. Restrictions on transferring property.
Protection From Creditors – Florida’s Constitution provides broad protection of a primary home from creditors. This means that a creditor cannot force the sale of a primary home no matter the value of the home. Interestingly, even the cash proceeds from a sale of a homestead property cannot be touched by creditors if such funds are set aside with the intent to purchase another homestead property in Florida. The exceptions (of course) to homestead creditor protection are mortgages on the home; association/mechanic liens; property tax liens; and federal tax liens. Otherwise, creditors cannot force the sale of a homestead property in Florida. A famous example is OJ Simpson’s move to Florida with the threat of a big judgment in the civil suit he lost for wrongful death.
Property Tax Exemptions – Generally, the assessed value of a homestead property is reduced by $50,000 when computing property taxes. This exemption is not automatic, however. Application must be made by March 1st in the year the exemption is sought. Also, this exemption allows for an increase in the assessed value of no more than 3% of the assessed value or the CPI, whichever is less. There are additional exemptions and much more information on homestead as it relates to property taxes at http://www.collierappraiser.com.
Restrictions on Transferring Property – Florida’s Homestead laws also restrict the transfer of primary homes to protect spouses. For example, one spouse may not transfer homestead property by deed without the signature of the other spouse, even if the property is held soley in the first spouse’s name. Nor can homestead property be effectively transferred by will to another if there is a surviving spouse or minor child. The intent of this law is to stop one spouse from transferring property and depriving the other spouse from having a place to live.
Bryant Title & Escrow 