Higgs v. Warrick: Lessees of 99-year Leases Qualify for Homestead and Save Our Homes Tax Exemption Purposes

The court made a decision that the property appraiser in Monroe County couldn’t revalue William L. Warrick’s home after his trust ended. This is good news for planners who help clients with similar trusts and are worried about losing tax benefits when the trust ends. A 98-year lease is a technique that allows someone to keep their homestead status and tax benefits after a property is transferred through a Qualified Personal Residence Trust (QPRT). The lease is set up before the QPRT ends, so the same person still has a beneficial interest in the property for tax purposes. This means they can keep getting the homestead exemption and Save Our Homes benefits, even if legal title to the property is transferred to someone else. A recent court case called Warrick supports the use of 98-year leases to keep these benefits after a QPRT ends. Warrick owned a home and put it into a trust, which allowed him to live there for 10 years without paying rent. After the trust ended, Warrick leased the home for 99 years. When he tried to keep his property tax benefits, the county said he couldn’t. But Warrick appealed and a board ruled in his favor, saying his lease meant he still qualified for the tax benefits. The property appraiser went to court to challenge a decision about property taxes. They argued that a law allowing people with long leases to claim a homestead exemption was unconstitutional. The court said the property appraiser didn’t have the right to challenge the law. The specific laws at issue say that people with long leases on property can claim a homestead exemption. The property appraiser said this should only apply to condos and apartments, not other types of property. They based their argument on the Florida Constitution. The Florida Supreme Court said that property appraisers can’t challenge the constitutionality of laws they have to enforce. Warrick’s lawyer argued that the property appraiser misinterpreted the law about 98-year leases for homes. The court agreed with Warrick’s lawyer. It’s too bad that the main legal argument was about the property appraiser’s right to challenge the law, instead of the lease issue. The court could have just agreed with the lower court’s decision, or given a simple explanation. The court ruled that a person with a 98-year lease on a home can qualify for a homestead exemption, which means they can get a tax break on their property. This decision is good news for people with 98-year leases who want to protect their home from certain taxes. One important thing to note is that there is a potential issue with the court’s ruling because it mentions a possible conflict with a previous case. This could mean that another property appraiser may challenge the ruling in the future. However, the authors believe there is actually no conflict with the previous case. Overall, the court’s decision in Warrick is very important for people dealing with issues related to their homestead property. If you own a home in Florida and live there, you can get a tax break called a homestead exemption. This means you don’t have to pay as much in property taxes. To qualify, you need to record your ownership of the property and use it as your main home. Once you get the exemption, your property taxes can only go up a small amount each year. If you have a special type of trust for your property, be careful about leasing it out, because it might affect your tax benefits. It’s a good idea to talk to a professional about this. In some cases, Florida courts have changed their minds about whether certain types of property qualify for a homestead exemption. This means that people who own property in a specific way might now be able to get a tax break. Another court case said that property appraisers can’t challenge the constitutionality of property valuation laws. This is because they don’t have the power to make that decision. Mr. Warrick was represented by two lawyers, one from Boca Raton and one from Ft. Lauderdale, in a legal proceeding. This information was shared by the Real Property, Probate and Trust Law Section.

Source: https://www.floridabar.org/the-florida-bar-journal/higgs-v-warrick-lessees-of-99-year-leases-qualify-for-homestead-and-save-our-homes-tax-exemption-purposes/