How to Appeal the Denial of a Homestead Exemption


In Florida, Property Appraisers who are planning to deny a taxpayer’s application for homestead exemption must notify the taxpayer of their  decision on or before July 1st.  Thus, many people will soon be receiving an unpleasant surprise in the mail.  This post will address common reasons for being denied a homestead exemption and the procedures for appealing the denial of a homestead exemption.

Why was my homestead exemption application denied?

The single most common reason for a homestead exemption application to be denied is that it was not filed by the statutory deadline.  Pursuant to Fla. Stat. 196.011, an application for a homestead exemption must be filed by March 1st of the tax year for which the exemption is sought.  Failure to file an application by March 1st constitutes a waiver of the exemption privilege for that year.  If an application is filed after March 1st and the petitioner demonstrates extenuating circumstances for the tardy application, the Property Appraiser may go ahead and grant the exemption.  However, if the Property Appraiser denies the exemption, the taxpayer would need to file an appeal to the Value Adjustment Board, as further discussed in my blog post on How to File a Late Homestead Exemption Application.

If the application was timely filed, then the exemption was most likely denied because the Property Appraiser determined that the taxpayer did not meet the requirements for a homestead exemption.  For example, the taxpayer may not have had the requisite interest in the property, or the Property Appraiser’s investigation may have indicated that the property was not the applicant’s permanent residence as of January 1st.  For more information on the substantive legal requirements for a homestead exemption, see my blog post on Qualifying for a Florida Homestead Exemption.

Notice of Denial

If a Property Appraiser intends to deny a taxpayer’s application for homestead exemption, the notice must be sent out no later than July 1st, and it must be either hand-delivered or sent by registered mail to the post office address given by the applicant.  See Fla. Stat. 196.151.  Beginning in 2009, a new statute, Fla. Stat. 196.193(5)(b), requires notices of denial of exemptions to specifically state the legal and factual basis for the Property Appraiser’s decision, and to be drafted so that a reasonable person could understand the specific facts about the applicant or their use of the property which caused the denial.  A notice that fails to meet those requirements is void.  However, some counties contend that this statute does not apply to homestead exemptions, and that issue has not yet been resolved by the courts.

Appealing to the Value Adjustment Board

The most common way to appeal the denial of a homestead exemption is by filing a petition to the county Value Adjustment Board.  The petitions, which can be found by clicking here, must be filed with the Clerk of the Value Adjustment Board (in the Clerk of Court’s office) no later than 30 days after the Property Appraiser mailed the notice of denial.  See Fla. Stat. 194.011(3)(d). In small counties, the petition will be heard before the full Value Adjustment Board, which consists of two members of the county commission, one school board member and two citizen members.  In larger counties, the petition will be heard before an attorney Special Magistrate, whose recommendation will be either approved or rejected by the full VAB.  Taxpayers who do not prevail before the VAB may take a further appeal to the circuit court, but that appeal must be filed within 15 days of the VAB decision.

Appealing Directly to the Circuit Court

Taxpayers also have the option of taking their dispute directly to circuit court, without going before the VAB.  A circuit court action to challenge the denial of a homestead exemption must be filed within 60 days of the certification of the tax roll by the Property Appraiser.  Also, in order to file a circuit court action, the taxpayer must pay the taxes in full, or at least pay the amount they admit, in good faith, to be owing.  Failure to pay the property taxes for the year in dispute and any subsequent years will likely result in the case being dismissed for lack of jurisdiction pursuant to Fla. Stat. 194.171.

Liens for Back Taxes

Taking this issue a step further, if a property owner had already been receiving a homestead exemption, but the Property Appraiser determines that they should not have been receiving the exemption, the taxpayer will be required by Fla. Stat. 196.161 to pay back taxes, plus a 50% penalty and 15% interest.  If the taxpayer fails to pay the back taxes within 30 days of receiving such a notice from the Property  Appraiser, the Property Appraiser can record a tax lien on all of the taxpayer’s property in the state.   Thus, retroactive removal of a homestead exemption can be very costly.  Also, as the courts have not yet resolved the question of whether taxpayers can bring back tax and tax lien issues before the VAB or whether they must file an action in circuit court, any taxpayer in this situation should consult an attorney as to how to proceed and whether it would be beneficial to file an action in circuit court.

Separate Homestead Exemptions for Married Couples


UPDATE:  Since the below article was written, the Second District Court of Appeal has issued an opinion in the Pasco County Wells v. Haldeos case.  The 2nd District rejected the Property Appraiser’s contention that a married couple can never receive separate homestead exemptions, and instead held that “in the unique circumstances presented in this case, where the husband and wife have established two separate permanent residences in good faith and have no financial connection with and do not provide benefits, income, or support to each other, each may be granted a homestead exemption if they otherwise qualify.”

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I’ve been procrastinating about addressing this topic for about a year now, because I keep thinking that one of these days the courts will issue a decision that finally puts this issue to rest.  But alas, as that hasn’t happened yet, I think it’s time to bite the bullet and go ahead and offer up a summary of what little guidance we do have on the question of whether and when a married couple can receive homestead exemptions on two separate properties.

Exemptions on Jointly-Owned Property

First, let’s address the easier matter of whether a person can receive a homestead exemption on their Florida residence if they or their spouse are already receiving an exemption on property in another state that is owned jointly.  The answer to that question is “no.”  Fla. Stat. 196.031(6) provides that a person who is receiving or claiming the benefit of an ad valorem tax exemption in another state where permanent residency is required as a basis for the granting of that ad valorem tax exemption or tax credit is not entitled to a Florida homestead exemption.  Thus, if your spouse is receiving a residency-based tax exemption or tax credit in Michigan and your name is on the title to that property, you will probably be denied a homestead exemption on your Florida property.

“But what if I am not on the title to my spouse’s homestead property?”, you ask.  Ah, that’s where it gets tricky.  Some counties will use the above provision as a basis for denying you a Florida homestead exemption because they believe that, even if you are not on the title to the property, because you are married, you are indirecly benefiting from your spouse’s out-of-state homestead exemption.  In the remaining counties, you may have a chance, but you still face one more obstacle – the “family unit” provision of the Florida Constitution.

“One Exemption Per Family Unit” Limitation

Since 1968, the Florida Constitution has provided that “not more than one [homestead] exemption shall be allowed any individual or family unit or with respect to any residential unit.”  When the Constitution was being adopted, the Constitutional Revision Commission originally proposed that the language limit the homestead exemption to “one per individual or married couple,” but the final version uses the phrase “family unit.”  Thus, the Property Appraisers and taxpayers of Florida have been forced to speculate as to what kind of relationship or living arrangement constitutes a family unit.  This issue has not been addressed by any appellate courts, but there is persuasive authority from the Attorney General’s office and several Florida trial courts that offer some guidance as to whether and when a married couple can claim separate homestead exemptions.

Attorney General Opinions

In response to questions from Florida Property Appraisers, the Florida Attorney General has issued several advisory opinions, which are not binding on the Property Appraisers, but are certainly given some weight.  In Attorney General Opinions 075-146 and 2005-60, the Attorney General interpreted the constitutional provision as allowing a husband and wife to establish separate family units, and thus receive separate homestead exemptions.  While the Attorney General did not provide any suggested criteria, he indicated that the Property Appraiser should consider the financial interdependence of the couple, and that if one spouse was maintaining the home of the other, they would probably not be considered separate family units.

Trial Court Cases

Although no appellate courts have issued a decision on this issue, several trial courts have weighed in.  In Pasco County, a circuit court judge disagreed with the Property Appraiser’s contention that a married couple automatically constitutes a single family unit entitled to only one homestead exemption.  The judge generally followed the Attorney General Opinions and found that the taxpayers were not a single family unit because one did not maintain the home of the other.

In Sarasota County, a circuit court judge considered the case of a married couple, where each spouse owned and lived in separate units within the same condominium building.  In that case, the judge ruled that the taxpayers were not entitled to separate homestead exemptions.  The judge found that in order to be entitled to separate homestead exemptions, the married couple would need to have filed for a dissolution of marriage and be able to clearly show an ending of their family relationship.

Finally, in Hillsborough County, a circuit court judge also found that a married couple was not entitled to separate homestead exemptions because their finances were substantially commingled, they were married, and they behaved like a family.

Conclusion

Married couples are statutorily prohibited form receiving dual homestead exemptions on properties that they own jointly.  However, where the properties are not jointly owned, they must still overcome the constitutional limitation of “one homestead exemption per family unit.”  There is currently no binding authority as to whether and when a married couple can be treated as two separate family units entitled to two separate homestead exemptions.  The Attorney General appears to believe that financial co-dependence is an important factor.  However, the courts have also looked at the couple’s relationship status.  In practice, some Property Appraisers deny dual homestead exemptions to all married couples, but most will follow up with the couple to obtain more information about their finances and, perhaps, their living arrangements.   The penalties for improperly receiving an extra homestead exemption are severe, so any couples who are contemplating seeking a second homestead exemption should be honest with the Property Appraiser about their married status and perhaps seek legal counsel to help them assess their situation and their legal rights.

Qualifying for a Florida Homestead Exemption


The March 1st deadline to apply for a Florida homestead exemption is rapidly approaching.  If you moved to a new home within the last year, this is a deadline you do not want to miss.  This article will explain the benefits of the Florida homestead exemption, the requirements for an exemption, how to apply for an exemption, and what to do if your application is denied.  It will also address some of the thornier issues, such as rental of homestead property and claiming multiple exemptions per family.

Benefits of a Homestead Exemption

There are numerous financial benefits to having a homestead exemption on your property.  On the most basic level, the homestead exemption itself entitles most homeowners to a deduction of $25,000 off of their property’s assessed value, which can result in several hundred dollars in tax savings.  If your home is worth at least $75,000, you will receive an additional $25,000 deduction from your assessed value, although that additional deduction will not apply to school tax levies.  Once you establish your right to a basic homestead exemption on your property, you may also qualify for additional homestead exemptions if you are over 65 years old or have a disability.  But perhaps most importantly, receipt of a homestead exemption means that, pursuant to the Save Our Homes Amendment to the Florida Constitution, the assessed value of your homestead property cannot increase more than 3% per year or the percent change in the Consumer Price Index.  Moreover, in many cases, this tax savings can  now be transferred to a new Florida residence if you move.  Thus, while the basic homestead exemption may only save you a few hundred dollars per year, the rights that come with a homestead exemption can be extremely valuable.

How to Apply for a Homestead Exemption

Homestead exemption applications must be filed with the county Property Appraiser by March 1st of the tax year for which the exemption is sought.  Thus, in order to receive a 2010 homestead exemption, you must apply by March 1, 2010.  If you acquired or moved into your new home after January 1, 2010, then you would not qualify for a 2010 homestead exemption, but you can go ahead and apply now for a 2011 homestead exemption.   If you already have a homestead exemption, you probably do not need to re-apply, as most counties use an automatic renewal process, whereby you only need to notify the Property Appraiser if you are no longer entitled to the exemption.

What property qualifies for a homestead exemption?

Pursuant to Fla. Stat. 196.031, in order to qualify for a homestead exemption, as of January 1st of the tax year in question, you must have either legal or beneficial title to the property for which you are seeking an exemption, and the property must be the permanent residence of either yourself or someone who is legally or naturally dependent on you.  Thus, the property can be owned by a trust, as long as the applicant retains beneficial title and a possessory interest in the property.  However, the homestead exemption may not be claimed by a corporation.

The property must also be you or your natural dependent’s “permanent residence,” which is defined by Fla. Stat. 196.012(18) as “that place where a person has his or her true, fixed, and permanent home and principal establishment to which, whenever absent, he or she has the intention of returning.”   In determining whether the property is your permanent residence, the Property Appraiser may consider a number of  statutory factors, including but not limited to the existence of a formal declaration of domicile, where your children are registered for school, your place of employment, residency in another state, the address where you are registered to vote, the address on your driver’s license or identification card, vehicle registration, the address on your federal income tax returns, the address on your bank statements, and proof of payment for utilities at the subject property.

Also, the homestead exemption only applies to that portion of the property that is classified and assessed as owner-occupied residential property.  Thus, mixed-use properties may only receive the homestead exemption benefits on a portion of the property.

Can a taxpayer claim more than one homestead exemption?

No.  In fact, Fla.Stat. 196.031 prohibits anyone who receives the benefit of a residency-based property tax exemption or tax credit in another state from also receiving a Florida homestead exemption.  Thus, not only can you not claim two Florida homestead exemptions, but you also cannot claim an additional residency-based exemption in another state.

Can my spouse claim a separate homestead exemption on property that they own independently?

Possibly.  The Florida Constitution only allows for one homestead exemption per family unit.  While the proper interpretation of “family unit” could, and likely will, take up an entirely separate article, most Property Appraisers interpret this provision to mean that a married couple can only receive one homestead exemption.  The Attorney General’s office and some trial courts have interpreted this provision to occasionally allow for separate homestead exemptions where the couple is separated or can prove financial independence.  However, not all Property Appraisers agree with this interpretation and this issue continues to wind its way through the courts.  Anyone who plans to try to obtain separate homestead exemptions should seek the advice of an attorney in order to avoid potentially costly penalties in the future.

Can I still receive a homestead exemption if I rent my property?

Possibly.  Fla. Stat. 196.061 provides that the rental of an entire dwelling constitutes the abandonment of that dwelling as a homestead.  However, under the Florida Constitution, the ultimate issue is whether the property was your permanent residence on January 1st of that tax year.  In recognition of that fact, the statute contains an exception, which states that abandonment of a homestead after January 1st of any year shall not affect that year’s homestead exemption as long as the property is not abandoned after January 1st for two consecutive years.  Thus, a snowbird who heads up north for the summer could conceivably rent their property every other year during the warmer months without losing their homestead exemption.

But isn’t it okay to rent homestead property, as long as you don’t rent it for more than 6 months?

No.  The confusion on this issue came about because, pursuant to Florida Statutes 196.081, 196.091 and 196.101, certain disabled veterans and other totally and permanently disabled persons are entitled to a complete exemption from all property taxes for their “real estate that is used and owned as a homestead.”  Florida Statute 196.012(13) then defines this phrase “real estate used and owned as a homestead” as the person’s homestead property, less any portion thereof used for commercial purposes.  The statute then states that “property rented for more than 6 months is presumed to be used for commercial purposes.”

In effect, if a permanently disabled veteran used a portion of their homestead property for commercial purposes, such as by renting a room or using a portion of the property for a home office, they would not receive a complete tax exemption on that portion of the property, although they would arguably still be entitled to the homestead exemption on the entire property.  In the author’s opinion, this definitional statute applies only to the total exemption for certain disabled persons, and not to the basic homestead exemption.  However, some Property Appraisers apply the 6 month rental limitation in their homestead exemption determinations, and a recent appellate decision may add fuel to that argument.

Conversely, just because the property is presumed to be used for commercial purposes if rented for more than 6 months does not mean that you can safely rent your property for less than 6 months without losing your homestead exemption.  As discussed above, your right to a homestead exemption is determined as of January 1st.  Thus, rental of homestead property on January 1st of any tax year, even for a few months, is a risky move.

Appealing a Denial of Your Homestead Exemption Application

The Property Appraisers are required to notify taxpayers by July 1st if they plan to deny their application for a homestead exemption for that tax year.   Fla. Stat. 194.011 then gives the taxpayer 30 days to file a petition to the county Value Adjustment Board.  Please note that if the Value Adjustment Board denies your petition, you have only 15 days in which to file an appeal to the circuit court.  See Fla. Stat. 196.151.  If you do not want to file a petition to the VAB, you can file an action directly in the circuit court, but such a lawsuit must be filed within 60 days of certification of the tax roll.

Homestead Portability: Transferring Your Homestead Cap to Your New Home


In Florida, the Save Our Homes Amendment to the Florida Constitution prevents the assessed value of homestead property from increasing more than 3% per year, or the percent change in the Consumer Price Index, whichever is lower.  While the tax savings from the Save Our Homes Amendment has no doubt helped many homeowners to stay in their homes even when values were rising, it also tended to discourage homeowners from moving to a new residence, for fear of giving up all of their accumulated property tax savings.  In 2008, Florida voters attempted to change that by amending the Florida Constitution to allow for “portability” of their accumulated homestead exemption tax savings.  This article will explain the basics of how to “port” your Save Our Homes tax savings to your new residence, and will address some of the more complicated situations that can arise, particularly when more than one owner is involved.

Portability Basics

The rules regarding portability are set forth in Florida Statute 193.155(8).  Essentially, a homeowner may “port” their Save Our Homes tax benefits to their new home as long as they establish their new homestead within 2 years of abandoning their previous homestead.  If the new homestead is more valuable than the old homestead, the homeowner may port up to $500,000 of capped value to their new homestead.  For example, suppose your old home was worth $350,000, but was assessed at only $250,000 due to the Save Our Homes Amendment (a $100,000 cap differential).  If you were to move to a new home worth $500,000, that home would be assessed at no more than $400,000 in the first year, with subsequent increases limited to 3% per year, or the percent change in the CPI.  If you move to a less valuable home, the amount of cap differential that you may port will be limited to your old home’s assessed value divided by its just value.  For example, if your old home was worth $500,000, but was assessed at $400,000, and you move to a less valuable home, the new home will be assessed at 80% of its just value the first year, as long as the cap differential does not exceed $500,000.

In order to port Save Our Homes benefits, when filing an application for a new homestead exemption, you must also file Form DR-501T, for Transfer of Homestead Assessment Difference by March 1st of the year you intend to establish a new homestead.

Portability When Combining Households

If two people who each have their own homestead decide to acquire a new homestead together, the Property Appraiser will use whichever prior homestead would result in the highest cap differential, and thus the highest tax savings.  However, once again, the cap differential may not exceed $500,000.

Portability When Abandoning Joint Property

When joint owners abandon homestead property and acquire new, separate homestead properties, the cap differential that they are allowed to port is calculated as described above.  However, the cap differential is then divided by either the number of owners of the prior homestead or, in the case of property owned as tenants in common, by each owner’s proportionate interest in the prior homestead.  For example, if two joint owners would be allowed to port a $100,000 cap differential to the same new residence, if they move to separate new residences, they would each be permitted to port $50,000.

Challenging Portability Decisions

A taxpayer may not challenge the assessment of their prior homestead property in a prior year, as that would be contrary to the requirement in section 194.171, Fla. Stat. that all tax assessment challenges be brought within 60 days of the certification of the tax roll or the decision of the VAB.  However, pursuant to Florida Statute 194.011(6), if a taxpayer disagrees with the Property Appraiser’s determination of their entitlement to portability or the amount they are allowed to port, they can file a Form DR-486PORT petition to the Value Adjustment Board where their new home is located.  The VAB where the new residence is located will then submit a notice to the VAB of the county in which the taxpayer previously resided and that VAB will hear the petition and render a decision.  The decision of the VAB in the previous county will be submitted to the VAB in the new county, which will consider that decision in rendering its own final decision (yes, I know – I never said this was a simple process).  If a taxpayer disagrees with the decision of the VAB, they may appeal the decision to the circuit court of the county in which their new homested is located, and that proceeding shall be de novo.

How to File a Late Homestead Exemption Application


So you missed the March 1st deadline for filing your application for a homestead exemption.  What now?  Are you completely out of luck?

Maybe not.  Florida law allows the Property Appraiser or the Value Adjustment Board to grant late-filed homestead exemption applications if the untimely filing was due to particular extenuating circumstances.  If you believe that your reasons for filing late meet this standard, you must do two things:

1.  File the late homestead exemption application with the Property Appraiser;  and

2.  File a petition with your county’s Value Adjustment Board no later than 25 days after the mailing of the TRIM notice by the Property Appraiser (which usually occurs in late August).

It is very important that you take both of the above steps, as the VAB cannot consider your petition unless you have filed an exemption application, however untimely, with the Property Appraiser.  The VAB will then notify you of the time scheduled for your hearing before the VAB or a Special Magistrate, where you will testify as to your reasons for filing late.  If the VAB determines that your untimely filing was due to particular extenuating circumstances and you were otherwise entitled to the exemption, your homestead exemption will be granted.

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