Transfer your Residence to a Life Estate Under Florida Law- Keep Homestead and Your “Save Our Homes” Valuation

I want to transfer my residence to my child/children keeping a life estate for myself so that my property avoids probate, will I lose my homestead exemption or my “Save Our Home” valuation? NO , to both.

Here is why: A transfer from full ownership (fee simple) to a life estate where the grantor keeps life estate and gives remainder to someone else is not a transfer which Florida law recognizes as a CHANGE of OWNERSHIP as stated in the Florida Constitution.

The  Florida Constitution states:

SECTION 4.  Taxation; assessments

1)  Assessments subject to this provision shall be changed annually on January 1st of each year; but those changes in assessments shall not exceed the lower of the following:

a.  Three percent (3%) of the assessment for the prior year.

b.  The percent change in the Consumer Price Index for all urban consumers, U.S. City Average, all items 1967=100, or successor reports for the preceding calendar year as initially reported by the United States Department of Labor, Bureau of Labor Statistics.

(2)  No assessment shall exceed just value.

(3)  After any change of ownership, as provided by general law[SEE GENERAL LAW BELOW],homestead property shall be assessed at just value as of January 1 of the following year. Thereafter, the homestead shall be assessed as provided herein. [IS A TRANSFER TO LIFE ESTATE A TRANSFER UNDER THIS SECTION, NO!]

GENERAL LAW –– Fla. Stat. 193.155  Homestead assessments

3)  Except as provided in this subsection, property assessed under this section shall be assessed at just value as of January 1 of the year following a change of ownership. Thereafter, the annual changes in the assessed value of the property are subject to the limitations in subsections (1) and (2). For the purpose of this section, a change in ownership means any sale, foreclosure, or transfer of legal title or beneficial title in equity to any person, except as provided in this subsection. There is no change of ownership if:

(a)  Subsequent to the change or transfer, the same person is entitled to the homestead exemption as was previously entitled and:

1.  The transfer of title is to correct an error;

2.  The transfer is between legal and equitable title; or

3.  The change or transfer is by means of an instrument in which the owner is listed as both grantor and grantee of the real property and one or more other individuals are additionally named as grantee. However, if any individual who is additionally named as a grantee applies for a homestead exemption on the property, the application shall be considered a change of ownership; [ THIS IS THE PROVISION THAT EXEMPTS LIFE ESTATE AS A CHANGE IN OWNERSHIP]

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THE BROWARD COUNTY PROPERTY APPRAISER WEBSITE- Directly Addresses this Issue.

HOMESTEAD EXEMPTION – Will I lose exemptions if I place my home in a life estate for me, and with a remainder to my kids?
Your homestead exemption will stay intact if you transfer a future interest to your children (or domestic partner, friend or others) but retain a life estate for yourself. This will also protect your existing Save Our Homes value.Note: After your death (which will automatically end your life estate), your exemptions will also expire, the property will be reassessed at market rate the next year, and your remainder heirs will need to qualify for a new homestead exemption (if they move onto the property and want to claim homestead).

If you wish to transfer your property to a life estate, the Law Office of Andrew Douglas, P.A. can help. Please feel free to call for the next available appointment.

Article by: Andrew Douglas, Esq., Andrew Douglas, P.A., 954.474.4420

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