Florida Homestead Exemption - What is a Family Unit?

2016 Could Bring Big Surprises to Many Homeowners in Florida

After the Defense of Marriage Act was overturned in 2013, there was no longer a federal ban on same sex marriage. That decision was left to the states. The IRS began allowing tax returns from same sex couples, states’ legislatures and agencies had to get on board with the change and decide how to proceed. Florida determined in 2015 that same sex couples would be legally recognized. While many celebrated this as a victory for social change, that silver lining wasn’t without a cloud, and this cloud could have very costly tax consequences.

Article VII, Section 6(b) of the Florida Constitution (“Fla. Const.”) provides that only one homestead property tax exemption shall be granted to “any individual or family unit.” When the term “family unit” was added to the Florida Constitution in 1968, the legislature did not provide a definition. In a time when the Beatles appearance on Ed Sullivan seemed scandalous, this was probably a fairly simple determination. However, times they are a changing and what a “family unit” looks like circa 2016 is becoming increasingly hard to pinpoint. According to the U.S. Census Bureau, traditional nuclear families, married two parent households cohabitating with their children, now represent less than 25% of American homes. The void of a clear definition of a “family unit” leaves the determination to the local officials. This is a troubling prospect, the puts property appraisers, as the constitutional officers tasked with assessing ad valorem tax, in the position of making very personal judgments about people’s lives.

The lack of definition of the term “family unit” is likely going to be a very troubling prospect for many couples who had previously not been recognized, and who have homestead on multiple properties. Homestead is determined by ownership as of January 1. The state did not recognize same sex marriage until after January 1, 2015. The TRIM notices for 2016 are the first year where, statewide, married same sex couples could be considered a “family unit.” Therein lies the aforementioned “cloud” to the silver lining of marriage equality. Picture the scenario of a couple. Older, established, each with their own home. This couple decides that they want to be together til death do them part, which means being the ones to make determinations regarding each other’s health, and the other practicalities of marriage. Our couple gets married. There are no more children at home, and they keep their finances separate. They keep their own houses, and spend most nights together but never move in to a joint residence. Are these two people a “family unit”? Does the State’s decision to recognize a piece of paper saying these two are married make them a family unit? Or are they two people, with two homes, entitled to two lawful homestead exemptions? To imply that because these two are married, they only get one exemption, is to assume that the terms “family unit” and “married couple” are synonymous, but we know that in 75% of America’s households that is simply not the case. Regardless of the gender of these two individuals, this puts the property appraiser in a position of having to determine what constitutes a family. However, in a somewhat absurd result, in the context of same sex couples the only shift was on the government’s side. Nothing has actually changed about this couple, their relationship, their lives, except the government perception of it. Can the state’s changed definition be the factor that makes them a family unit? This, again, would falsely equate marriage to be synonymous with being a family unit. This is a precarious void that needs to be filled.

The other problem with the lack of definition of the term is the inconsistency of results from one county to the next. Suppose our couple has their homes in separate counties, one home is larger and they are more likely to spend more time there, making it the more likely choice for the joint homestead if such choice had to be made. The property appraiser for one county can deny the couple’s homestead, on the basis of the couple being a “family unit” while the property appraiser in the county where they less often reside may determine the couple is not a “family unit” and leave that property’s homestead intact. The lack of a clear term here has very real results. While the couple has to option to re-apply for the homestead in the following year, this creates a twofold consequence. The first problem is the loss of homestead for the current year leaves the house without the benefit of the $50,000 exemption, and subject to creditor claims, for the current year. The second issue is that this disallowed homestead would cause the couple to lose the save our homes cap. This is the limit on the increase in taxable value on a property, and is the most valuable benefit to many homeowners. This cap can represent tens of thousands of dollars in value on the home that is not subject to ad valorem tax because the save our homes cap limited the appreciation in value.

Until the legislature clearly defines what constitutes a “family unit”, couples who are married and receiving multiple homesteads should proceed with caution. Documentation to show the personal connection, such as whether finances are mixed, tax returns are filed jointly, vacations taken together or separate, or time spent at each residence, may come in handy if the property appraiser calls. While no one wants an elected official in their finances, on their vacations, or in their bedroom, more data can result in a better position in the event the county comes calling.

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 tax controversy, with focus on real property issues. 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. You may contact Amanda via email at AmandaLevine@FloridaSalesTax.com or 954-642-1088 or read more about here on her BIO HERE.

Additional Resources

Florida Homestead Tax Exemption Case – Mary Jane, published March 15, 2015, by Amanda Levine, Esq.

Miami-Dade Property Owners Take on Tax Collector, published on Apr 11, 2015, by Amanda Levine, Esq