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Tampa Estate Planning Attorney > Blog > Tax Law > Homestead Exemptions vs. Homestead Protections

Homestead Exemptions vs. Homestead Protections


There’s a potential battle brewing in Tallahassee over homestead exemptions. No matter what side of the issue you’re on, the important thing from a legal standpoint is understanding that the media tends to mix two different concepts of what a homestead exemption means.

Homestead Exemptions

As we all know, our homes are taxed based on the value of the property as appraised by the county. But what you may not know is that we are not actually taxed on that full value. Rather, there is a homestead exemption that automatically lowers the value of your home by $50,000 for property tax purposes.

So, if you are in a home that is appraised at $150,000, you would only pay property tax as if the home was worth $100,000.

The bill being debated in the legislature would raise the homestead exemption from $50,000 to $75,000. Many against the measure cite to the significant loss of tax dollars that would ensue from such an increase. Because homestead property is not taxed at a very high level (even though it often feels like it), detractors say that the benefits to homeowners would be nominal compared with the loss of funding for vital government services (although taxes collected for schools are not subject to the increase).

Homestead Protections

What consumers should be aware of is that the homestead exemption for tax purposes has nothing to do with the exemption that we know protects homesteads from being taken by creditors. Florida’s strong homestead protections protect not only homesteads, but even money derived from the immediate sale of a homestead that is intended to be put towards the purchase of another homestead.

The homestead exemption that protects consumers from creditors is generally absolute no matter how much the property is worth (the amount of equity in a homestead may, however, be capped for other purposes, such as bankruptcy or applying for Medicaid benefits). This is why many people seeking asset protection will put significant dollars into the purchase of homestead property.

Only tax liens, mechanics liens (based on construction or repair to property) or liens that you voluntarily give, like mortgages, can result in homestead being taken to satisfy a creditor.

Protection can also be lost if property is not owned by a person (i.e., property in the name of a company, although some kinds of trusts can own property and maintain the protections).

Voters Should Know the Difference

Homestead protections have nothing to do with whether the taxable value of the property is raised or lowered. Voters should not think that voting to raise or lower the taxable value of their property would affect its value as an asset protection vehicle.

Of course, this is subject to the caveat that your home can be taken for failure to pay property taxes. So, if lowering or increasing the taxable value of property makes it more or less likely that consumers can keep their home, the tax does have an indirect effect on the ability of consumers to retain their homestead.

Understand how to use the law to protect your assets. Contact Tampa business attorney David Toback to discuss a comprehensive asset protection plan for your family.




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