The Impact of Co-ownership on Florida Homestead

The Florida Supreme Court says there are three types of homestead, all meant to protect the family home. Co-ownership of property, like owning it with someone else, can affect these protections. For example, it can impact tax benefits for the home. If you own a home and live there, you can get a tax break of up to $25,000 on the value of your property. If there are multiple owners, the person who lives there can get the full tax break. But everyone is still responsible for paying the taxes, so you need to work out who pays what. In simple terms, when co-owners share a property as tenants in common, they can only claim a homestead tax exemption if they live on the property. If only one co-owner qualifies for the exemption, they can only claim it for their share of the property value, up to $25,000. This means the other co-owners will have to pay the remaining property taxes. If a family wants to buy a home with one family member planning to claim the exemption, they need to make sure that person owns enough of the property to use the full exemption. If you have a life estate in a property, you can qualify for a homestead tax exemption because you have the right to live in and use the property. But if you only have a remainder interest in the property, you can’t qualify for the tax exemption because you don’t have the right to use the property yet. Also, Florida has a law called the Save Our Homes tax cap, which limits how much the taxes on your home can increase each year. If someone qualifies for the homestead tax exemption, their property value can only go up by three percent each year for tax purposes. If there’s a change in ownership, the property has to be assessed at its full value. If co-owners qualify for the exemption, the entire property is subject to the tax cap. This can save a lot of money on taxes when home values are going up fast. When property is owned by different people, the homestead tax exemption and the Save Our Homes (SOH) tax cap only apply to the portion of the property owned by the person who qualifies for the exemption. For example, if one person qualifies for the exemption, their portion of the property will have a tax cap, while the others’ portions won’t. If multiple people qualify for the exemption, their portions will have the tax cap, but the others’ won’t. This means the assessed value for tax purposes may be different for each co-owner. If Abby, Ben, and Chuck qualify for the homestead tax exemption, their property’s assessed value can only go up by 3% each year. This is called the Save Our Homes tax cap. The ownership shares of the co-owners matter, so it’s important to think about this when buying property together. If one co-owner has a life estate and also qualifies for the homestead tax exemption, they can apply the tax cap to the whole property. But if it’s held as tenants in common, the exemption and tax cap can only be used for the percentage of the property that qualifies for the homestead tax exemption. So, it’s important to think about ownership when applying for tax exemptions. If parents and their child own a property together, they need to consider how they title the property because it can affect their taxes and legal protections. If they title the property as joint tenants with right of survivorship, the child can get tax benefits if they qualify for the homestead tax exemption. If they title the property as tenants in common, the child’s ownership percentage will determine their tax benefits. Additionally, Florida’s homestead laws provide strong protection against creditors, meaning that the family home is often safe from being taken by creditors. If a married couple owns property together, the property is protected from their creditors as long as one of the spouses qualifies for the homestead creditor exemption. If unmarried people own property together, they usually own it as tenants in common, meaning they each have an equal share unless they specify otherwise. If they own the property as joint tenants with right of survivorship, their shares are equal. The homestead creditor exemption in Florida is not affected by how the property is owned, whether it’s as tenants in common or as joint tenants with right of survivorship. As long as a person has ownership in the property, they can claim the homestead exemption, regardless of how the property is owned. If all owners of a property qualify for the homestead creditor exemption, the property is protected from being sold to pay off debts. But if one owner doesn’t qualify, their creditors can force the property to be sold to pay their debts. This can put the other owners at risk of losing the property until the non-qualifying owner meets the requirements for the exemption. When you own property with someone else, it’s important to understand that if one person has debts, the property could be at risk. This is true whether you own the property together or if one person helped pay for it. If you only have a life estate in a property, you can use it while you’re alive, but you can’t do anything to harm the property for the person who will own it after you die. When you die, the other person becomes the owner. The homestead creditor exemption in Florida allows someone with a life estate (a partial ownership in a property for their lifetime) to protect their property from creditors. However, co-owners with remainder interests (who get the property after the life tenant passes away) are not protected. There have been some recent bankruptcy cases where a remainderman was allowed to claim the exemption, so it’s still a bit of a gray area. In Florida, if the owner of a homestead property has a spouse or minor child when they die, the property cannot be given to someone else in their will, but can be given to the spouse if there are no minor children. The owner can also sell or give away the property while they are alive, and if they are married, they can transfer the property to their spouse. If someone owns a home and has a spouse or minor children when they die, the home can’t be given to someone else in a will. The spouse or children will inherit it. If there’s no spouse or minor children, the owner can leave the home to whoever they want. If the property is co-owned and it’s considered a homestead, the rules about who can inherit it only apply to the co-owner who actually lives there. In Florida, there are rules about how your home can be passed down to your family after you die. If you own the home with your spouse, it automatically goes to them when you die, and they don’t have to go through a legal process to get it. If you own the home with someone else and have a special agreement that it will go to them when you die, then it won’t go to your family like it normally would. But if you own the home with someone else and don’t have a special agreement, then it will go to your family when you die, following specific rules. If you own property in Florida, you can get tax exemptions and protection from creditors if you live in it. But if you own the property with someone else, you need to be careful about how you title the property and how much of it you own. There are different rules for how the property gets passed on when someone dies, so it’s important to think about who you want to inherit the property. It can be complicated, so it’s best to get advice from a lawyer who knows about Florida property laws. If there are multiple owners of a life estate, they have to share it according to certain rules. Also, the protection for creditors and tax exemptions for a house are different things. If the ownership of the house changes, it may affect the tax exemptions. And if someone has a remainder interest in a house, they may not get the same protections as the current owner. Also, there are limits to the homestead exemption, even though it seems unlimited. When a married couple owns a home together, it is considered a “tenancy by the entirety” in Florida, which means they both own the whole property and not just a share of it. This form of ownership also gives the property certain legal protections, like being exempt from creditors except for certain situations. However, if the couple wants to have a different form of ownership, they need to use specific language to do so. If two people own property together and one of them sells their share to someone else, the new owner only gets the share of the original owner and not the whole property. When the property is sold, the original owners will each get a share of the money. This is because the property is now owned by the original owners and the new owner as separate shares. This is different from when the property was owned by the original owners together. In Florida, if someone leaves their home to their heirs when they die, the home is protected from the creditors of the person who died. This means the creditors can’t take the home to pay off debts. There are specific laws that protect the home in this way. If you have more questions about this, you can ask a lawyer for help.

Source: https://www.floridabar.org/the-florida-bar-journal/the-impact-of-co-ownership-on-florida-homestead/