The death of a spouse is one of life's most stressful events. One should not be faced with difficult legal decisions in a time of grieving, especially decisions regarding something as important as the family home. When Frank Spain passed away in 2006, his widow certainly had more on her mind than filing paperwork at the local property appraiser's office. However, six years later the property appraiser decided they should have been priority and tried to recover over $200,000 in taxes.
By way of background, Mr. Spain purchased is home in 1984, and filed for homestead in Martin County. After the couple married in 1985, he transferred the property to himself and his new wife as tenants by entireties, a designation reserved only for married couples. The homestead was left unchanged. Frank passed away in 2006, and Mary Jane continued to live at the residence. In 2012, Martin County Property Appraiser attempted to assess $283,070.45, which included tax, a 50% penalty, and interest for the difference in value of property taxes paid, and the value without homestead protection. As such, the property value was reassessed, rather than limited to the 3%, or consumer price index, increase which would be used while the property was protected by homestead. A lawsuit was filed in the county circuit court, and Ms. Spain ultimately won. In a surprising move for an office run by an elected official, the Property Appraiser's Office of Martin County, unsatisfied with the proposition of a loss, filed an appeal to the Fourth District Court of Appeals.
Article VII, Section 6(a) of the Florida Constitution is the "Save Our Homes" amendment. This amendment allows "[e]very person who has the legal or equitable title to real estate and maintains thereon the permanent resident of the owner, or another legally or naturally dependent upon the owner," to claim a homestead tax exemption. For real property to qualify for a homestead exemption, an applicant must make three showings: (1) that the real property is owned by a "natural person"; (2) that the owner has "made, or intend[s] to make the real property his or her permanent residence or that of his family"; and (3) that the property meets the size requirement of .5 acres within a municipality and 160 acres outside of a municipality[1]. When property is owned by a couple as tenants by entireties, both parties own the entire property. Therefore, both Frank and Mary Jane owned the home. After Frank passed, the home was still "permanent resident of the owner." Additionally, Mary Jane is a natural person, the home was her permanent residence, and met the constitutionally imposed size requirements. Therefore, Mary Jane met all the requirements to be entitled to homestead, except for her name on a single sheet of paper.
In a thoughtfully worded opinion, Judge Gross identified there is no change in ownership at the time of the death of a spouse which would trigger the requirement to reassess a home's value under the Save Our Homes amendment. Moreover, the court found "The rule created by reading the Constitution and applicable statutes together is that where a husband and wife occupy a homestead and where one of the spouses properly applied for and obtained a homestead exemption, the death of one spouse will not destroy the homestead exemption of the other so long as the survivor continues to use the homestead as his or her permanent residence.'' After two years, Ms. Spain was awarded a refund of the tax, penalty and interest in the amount of $283,070.45. This is a bittersweet win for this Taxpayer. It took a two year legal battle to get the closure deserved. When state agencies waste funds on lawsuits against Taxpayers, nobody wins.
About the author: Ms. Levine is an associate attorney with the Law Offices of Moffa, Sutton, & Donnini, P.A. Her primary practice area is Florida sales and use tax controversy. Ms. Levine received a B.S. in Accounting from University of Central Florida. She spent several years working in public accounting before attending Nova Southeastern University Law School. She received her Juris Doctorate in 2014. During her time at Nova Law, Ms. Levine was the Executive Justice of Academics for the Moot Court Honor Society, as well as the Finance Chair. She was awarded by the National Order of the Barrister, a national honor society which encourages oral advocacy and brief writing skills.
AUTHORITY
Sec. 193.155, F.S. – Homestead assessments
Article VII, Section 6(a) Florida Constitution – Homestead Exemption
Aronson v. Aronson, 81 So. 3d 515, 518 n.2 (Fla. 3d DCA 2012)
Laurel Kelly, Ruth Pietruszewski v. Mary Jane Spain, case 4D14-510 (Fla. 4th DCA 2015)
ADDITIONAL RESOURCES
FLORIDA COMMERCIAL PROPERTY OWNERS GET BLINDSIDED BY SALES TAX, published December 31, 2011, by James Sutton, CPA, Esq.
IS RENT SUBJECT TO FLORIDA SALES TAX?, published January 26, 2015, by Jerry Donnini, Esq.
FORT MYERS SALES TAX ATTORNEY | SALES TAX AUDIT DEFENSE, published August 31, 2014, by James Sutton, CPA, Esq.
[1] Aronson v. Aronson, 81 So. 3d 515, 518 n.2 (Fla. 3d DCA 2012) (citing Cutler v. Cutler, 994 So. 2d 341, 344 (Fla. 3d DCA 2008)).