What Happens to the Florida Exemption if the Property is rented for a few Months? ​

What Happens to the Florida Exemption if the Property is rented for a few Months?

What and who does the Florida Homestead Exemption clause protect?


Section 4 of Florida’s Constitution [http://leg.state.fl.us/Statutes/index.cfm?Mode=Constitution&Submenu=3&Tab=statutes#A10S04\] maintains that a creditor cannot forcibly seize a debtor’s homestead. The clause is meant to protect a home after the death of a spouse of the declaration of bankruptcy, providing physical shelter and some financial protection. Any primary residence up to 1/2 acre in a city or 160 acres outside of a city, up to any value, qualifies as a homestead. This unlimited Homestead Exemption is unique to Florida and a few other states. Other states such Kentucky place a limit on the amount of equity protected, while Pennsylvania and New Jersey don’t protect any part of the homestead from creditors.


What happens if a Florida homeowner rents out his house?


Let’s assume a client from Pennsylvania buys a home in Florida to use in the winters. During the summers, he rents out the Florida home and resides in Pennsylvania. Assuming he obtains a Florida drivers’ license and establishes the Florida house as his primary residence, will his property be protected by the Homestead Exemption even if he rents it out for a few months?


Florida Statute 196.061 [http://leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0100-0199/0196/Sections/0196.061.html] has caused some confusion among homeowners by stating that renting a property out for more than 30 days per year constitutes abandonment, and the property will lose homestead exemption for tax purposes. But fortunately for the Florida homeowner, homestead exemption for tax purposes is different from homestead exemption from creditors.


Florida residents can only lose homestead exemption from creditors if they permanently abandon their Florida residence as their primary residence. In one case [https://scholar.google.com/scholar_case?case=5771418727355489606&q=in+re+lloyd&hl=en&as_sdt=4,253,254,255,262,263,264,265,266,267,327&as_ylo=2007&as_yhi=2009], the judge ruled in favor a a debtor who claimed protection for a Florida property that he leased most of the year. In another case [https://scholar.google.com/scholar_case?case=5771418727355489606&q=in+re+patricia+jean+lloyd&hl=en&as_sdt=40003], a debtor rented his Florida property temporarily throughout the entire year and still claimed homestead exemption.


What happens to the tax exemption?  


If the homestead is abandoned for more than 30 days per year for 2 consecutive years, it may lose the standard Florida tax exemption of up to $50,000 for all permanent residences [https://floridarevenue.com/property/documents/pt113.pdf]. However, the property may qualify for other exemptions. Staying educated will help you capitalize on property without losing money through legal loopholes. 

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