The Loss of Homestead Through Rental

Recently, there have been conflicts between property appraisers and homeowners over the right to rent out their homesteaded properties. Property appraisers have been revoking the homestead exemption for homeowners who rent out their entire homes for long periods of time, saying it means they no longer live there. However, some homeowners who rent out their homes for short periods of time are also being challenged. This article explores the impact of renting on the homestead exemption and suggests changes to the law to make it clearer. In the past, Florida courts have looked at each case individually to decide if renting out a property means the owner has abandoned their homestead. Older cases and advice from the Florida attorney general used to support keeping the homestead exemption, even if the owner rented out their property. Early cases showed that homestead would be restored if the homeowner left personal property onsite and intended to return. The Florida Legislature tried to clarify the law by passing a statute in 1996, but it was unclear in some areas. The rules for interpreting tax laws depend on the type of exemption, and courts have not been consistent in how much proof is needed for homestead cases. Ultimately, homestead is a right that homeowners have to apply for. The Florida legislature has set rules for people to qualify for homestead, like having permanent residency and providing certain documents. But the law about renting out your homestead assumes you already qualified for homestead and is about whether you’ve given up that right. Florida courts have been strict about qualifying for homestead, but they have also protected the right to homestead once it’s been established. There are different rules for tax exemptions and the right to homestead in Florida. For tax exemptions, the burden is on the property appraiser to prove that an exemption should not be granted. But once someone has established the right to homestead, the courts are usually protective of that right. A recent case in the First District Court of Appeal held that a property owner had abandoned their homestead under the rental statute, even though they argued that they hadn’t rented out the entire property. This decision could conflict with earlier opinions from the Florida Supreme Court and other district courts. However, the case could be seen as a situation where there was enough evidence to revoke the homestead. The rental statute uses the term “rental,” which is similar to a lease, while a license agreement is different and gives someone the privilege to enter a property. This distinction came up in a recent property tax case. The Florida State Fair Authority had tax-exempt status for certain land it used for fairs. They let a truck driving school use the land when there were no fairs. The property appraiser thought this meant the land was no longer tax-exempt, but the court disagreed and said it was just a permission, not a lease. This means the truck driving school didn’t have full control of the land, so it didn’t count as a rental. This is important for people who want to keep their homestead tax exemption. The rental statute doesn’t clearly say what “entire dwelling” means for a homestead. A court case said excluding two closets from a rental didn’t protect the homestead, even though that’s not the literal meaning of “entire dwelling.” The court didn’t want to reward a property owner who seemed to have abandoned their homestead, especially because their property was in a resort community and they put it in a corporate rental pool. So, the court said the owner couldn’t save their homestead just by locking off two closets. In the future, “entire dwelling” should be understood to mean the main living areas of the house, but we still need to figure out exactly what it includes. In simple terms, the term “entire” means that nothing should be left out, and “dwelling” includes the porch and surrounding property according to the law. This means that if a homeowner leaves only a small amount of their belongings in the house they are renting out, it may show that they still intend to come back. On the other hand, if they leave most of their belongings and lock them up, it may show that they still intend to return. However, court decisions on these matters can vary, so it’s important to be cautious when dealing with rental property laws. The authors predict that in the future, property appraisers will be more aggressive in taking away the homestead exemption from homeowners who rent out their property. However, the current rental law is unclear and doesn’t give homeowners enough guidance. A recent court decision has made things even more complicated. The authors think the law should be changed to make it clearer and to protect homeowners who rent out their property. They suggest specific changes to the law to make things fair for homeowners. In Florida, some people may have to rent out their homes to make ends meet. But if they already have a homestead, it’s not fair to make them lose it just because they’re renting out their home. The law should make it clear that property appraisers need to consider the homeowner’s intentions before deciding they’ve abandoned their homestead by renting out their home. This is based on previous court cases and a state law that says property rented out for more than six months is considered commercial, not residential. Also, members of the armed forces who rent out their homestead because of their job are not considered to have abandoned their homestead. If you own a home in Florida and live there, you can get a tax exemption on the first $25,000 of the home’s value. If the home is worth more, you can get an exemption on a higher amount, up to $75,000. You have to apply for the exemption, and the rules are strict. For example, if you’re not a U.S. citizen, you may not be eligible for the exemption, even if you pay taxes and have a driver’s license. In certain situations, strict rules about homestead exemptions may not apply, such as when someone is trying to cheat a creditor. Courts have looked at cases where a married couple is separated and living in different houses, and each can claim a homestead exemption. In another case, a couple was living outside of Florida while having marital problems, and they were still allowed to keep their homestead exemption. There is also a disagreement between two court districts about who has to prove that a property has been abandoned. Overall, the rules about homestead exemptions can be complex and may vary depending on the situation. Rentals and leases used to have different meanings, but now they are often used interchangeably. In Florida, the law treats rentals of more than six months as commercial, but shorter rentals may not count. The Florida Legislature recognizes the difference between licenses and rentals, and has different definitions for them. In a court case in Maine, the court decided that a two-week rental of a cottage was a license, not a lease, because it did not give the renter legal possession of the property. In a different case in Florida, the court defined a “dwelling” as a building designed for people to stay in at night, including tents and attached porches. This definition is important in cases involving liability for injuries on someone’s property. The authors argue that interpreting rental laws against property owners will make it less appealing for people to rent out homes, from luxury to starter homes. They also point out that while housing prices have dropped, it’s still hard for people to buy homes because of strict lending rules. This hurts low and middle-income families. The authors are lawyers who have experience in real estate and development law. They thank others for their help with the column. They submitted the column on behalf of a legal section.

Source: https://www.floridabar.org/the-florida-bar-journal/the-loss-of-homestead-through-rental/