Wednesday, September 21, 2005

Homestead Exemption Denial May Be Illegal

A team of investigators working with Broward Property Appraiser Lori Parrish claims that they have uncovered property owners who claimed homestead exemptions to reduce taxes on vacation homes and rental property, not their primary residence. The investigation allegedly relied a great deal on tips from neighbors but has begun moving into a new phase in which investigators are checking tax records against utility bills to rat out those who have homestead exemptions on real properties where the appraiser claims that the homeowner's don't currently live, although they claim to live there. Our response to this abuse of the law and the total disregard of the common law is as follows:

Just to clarify the law a bit, we thought we would let you know the facts regarding what constitutes a homestead, as we feel that the property appraiser is wasting tax dollars and unnecessarily burdening the taxpayers due to her ignorance of the law and total disregard for the cases on record. One's Homestead is a rather simple equation in the end; use of the residence plus intent to remain. The notion of "home" is an elusive and elastic concept that remains a powerful component of virtually every culture. Emily Dickenson wrote, "Where thou art, that is Home." Robert Frost observed that "Home is the place where, when you have to go there, they have to take you in." Johann Wolfgang von Goethe claimed, "He is the happiest, be he king or peasant, who finds peace in his home." And Christian Morgenstern offered, "Home is not where you live, but where they understand you."

The notion that the home is not only one's castle but that one's castle should be protected from one's creditors is very much a part of the American legal landscape, and that is never more evident than in the very generous homestead exemption found in the Florida Constitution. The constitutional provision exempting a homestead does not designate how title to the property is to be held and it does not limit the estate that must be owned; therefore, an individual claiming a homestead exemption need not hold fee simple title to the property. Once a property acquires the status of a homestead, that characteristic continues to attach to it unless the homestead is alienated in the manner provided by law. Alienation (the legal definition) means complete written declaration of abandonment or purchase of a new homestead, or renting out of the entire parcel of homestead property on a permanent basis. A homestead will lose its status by abandonment only when the owner voluntarily abandons the homestead with no intent to return. Briefly renting a home while traveling back and forth to another state or country does not abandon the homestead status. Absence for financial, health, job, travel, family or any other reason is not abandonment.

In order to qualify his or her property with homestead status, the person seeking the homestead exemption simply must have an actual intent to live permanently on the property, as well as the actual use and occupancy of the property. A citizen's right to homestead protection under the Florida Constitution is considered a paramount rule of public policy that would justify departure from an otherwise applicable rule of comity. For the purposes of the homestead exemption, it is enough if the one claiming the homestead exemption has any beneficial interest in the property; it is not necessary that he hold any legal title to the property. Mere possession without any title whatever is sufficient to support the claim of homestead, where such possession is lawful. Any equitable or beneficial interest in land also gives the claimant the right to exempt it as his homestead. Thus, under Florida law, a homestead exemption can only be claimed for one parcel of property, that property must be owned by the person claiming the exemption, and it must be the primary residence of the owner or his family. What constitutes homestead property is a question of fact. Both the physical characteristics of an asset, as well as its use, should be considered in determining whether the asset is exempt under the homestead laws.

In order that the claim of homestead be sustained, the disputed premises must be occupied as a homestead by the claimant as his actual residence. The fact that a certain homeowner had never filed a tax return in the United States was not sufficient to demonstrate that the debtor did not live in the home in question for purposes of the homestead exemption. A taxpayer must reside on the property on January 1 of the relevant tax year in order to satisfy the requirements of Article VII, section 6, Florida Constitution, and section 196.031, Florida Statutes, which authorize the tax exemption for qualified homestead property. However, Florida courts have held that the physical presence of the owner is not a requirement of either the Florida Constitution or the statute. The overriding test is whether or not it is the "family home" in actuality, and has the element of permanency. Ultimately, all that is required to establish a homestead under Florida law is that property owner reside on property and, in good faith, make property his permanent home.

In order to be entitled to the homestead exemption, continuous, uninterrupted residence is not required. Although daily residence is not essential, a homestead right does not extend to property that the claimant has not occupied as a dwelling place or home. It frequently happens that a homesteader may own two separate pieces of property within the state, both of which he may occupy at intervals. It is a general principle, however, that there must be an intention to reside on the property as a permanent place of residence before a claim of homestead rights therein may be sustained. And it seems clear that the claimant cannot have two permanent residences at the same time, the designation of one property as the home being a question of fact. If it is shown that the owner has ceased to occupy the disputed premises and has established his residence elsewhere, he may not successfully claim a homestead right therein.
In the recent bankruptcy case of 'In re Prestwood' (US Bankruptcy Court, Case No. 02-23764-BKC-PGH-7, So. Dist. Of Florida), the trustee's position in this case sought to recover certain alleged fraudulent transfers and also objected to the debtor's claimed homestead exemption. The debtor listed an interest in a condominium located in Pompano Beach, Florida, which he claimed as his homestead. The first count of the complaint contended that the debtor was not entitled to claim a Florida homestead because he never intended to live in Florida but simply kept a "vacation property" here. It was the debtor's contention that he lived in Florida but routinely traveled back to California for his work. The confusion related to the residential property the debtor and his wife owned in Huntington Beach, California. However, for purposes of the homestead issue, the inquiry is rather simple: did the debtor in fact move to Florida with the intent to reside there indefinitely?

The trustee, however, pointed out that prior to the bankruptcy filing, the debtor did not have a Florida bank account or own a car registered in Florida. The debtor failed to claim Florida's homestead ad valorem property tax exemption, which only allows for a reduction in the payment of real estate taxes for Florida residents. The debtor's bankruptcy petition showed a California mailing address. The debtor's tax returns listed the California home as his residence. On credit applications and personal guaranties given to vendors doing business with a corporation, the debtor listed the California property as his residence. The trustee also supplied the Court with bank records showing the use of his wife's debit card; most of the charges which were incurred in California, not Florida. Perhaps the most significant objection the trustee raised to the court was regarding the debtor's purported Florida homestead is the fact that the debtor continued to work for various California companies.

What this array of conflicting testimony means is that there is no "smoking gun," no concrete, conclusive evidence of the debtor's actual domicile or homestead. Such things as one's mailing address become a transitory concept, based more on ease of access wherever one might be at the moment, rather than on the idea that one's mail should be sent to where you "live." It is, one might suggest, simply the modern equivalent of the old saying, "Home is where I hang my hat."

None of this, however, should imply that such a debtor is to be denied the opportunity to claim a homestead to the extent one is appropriate. Indeed, one of Florida's strongest exemptions is that which protects homestead property. As more than one court has indicated, the Florida Constitution grants debtors "a liberal exemption" for homestead property. In Florida, a homestead is established when there is "actual intent to live permanently in a place, coupled with actual use and occupancy." Ultimately, all that is required is that the property owner reside on the property and in good faith make the same his permanent home. Exceptions to the homestead exemption must, by law, be strictly construed in favor of claimants and against creditors or legal challengers.

However, on the issue of this debtor's homestead, the Court had to eventually conclude that the debtor had provided sufficient evidence of his residence in the Pompano Beach condominium and his "actual intent" to live there permanently prior to the filing of this bankruptcy case. His declaration of homestead affidavit and claim was sufficient. One’s homestead or domicile is a rather simple equation in the end: residence plus intent to remain, along with the homestead declaration claim.

Exceptions to the homestead exemption are to be "strictly construed" in favor of any claimant, and the courts can only conclude it that a debtor resides on the property and "in good faith" intends it to be his permanent home should a claim be filed. Being a Florida resident, having your bills and mail sent to the same address, and having a driver's license showing the same address, is not required, although the statute gives the property appraiser the right to use those items as part of the issue regarding the facts of each case. The statement in the article linked below; "the only place to dispute a lien is in a courtroom..." does not ring true.

Is your homestead exemption legal?

Florida statutes are vague when it comes to describing who qualifies for homestead tax exemption status and Save Our Homes tax breaks. To learn more, one must turn to the judicial system and the court opinions on the matter. To qualify for the tax exemption, a person must intend for their Florida home to be their permanent residence on Jan. 1 of the tax year. There are clear opinions, however, for how much of the year that person must actually live in the home.Beyond the residency requirement, what is considered illegal homesteading changes from one county to the next depending on how local officials interpret state law. the problem is, they don't know the court rulings and case law on the matter.

Questionable practices per the property appraiser include:* Renting out a home you own;* Applying for homestead status on more than one property;* Putting one homesteaded property in a husband's name and a second in a wife's. [Note: Not necessarily a violation, in fact it is allowed]* A person loses their protected status if they sell their home, give it away or will it to relatives who aren't already listed as owners.You are breaking the law if you claim a homestead illegally, but chances are you won't be prosecuted. Instead, counties typically place a lien on the property to collect the unpaid taxes, fees and interest. In addition to forcing repayment of any money saved, state law allows for a 50 percent tax penalty and 15 percent annual interest on the illegal savings. Someone who saved an average of $2,000 a year for five years could be hit with a $16,500 bill.

Intention to establish a permanent residence is a factual determination to be made, in the first instance, by the property appraiser as allowed by statute. The following are relevant factors that may be considered by the property appraiser in making a determination as to the intent of a person claiming a homestead exemption to establish a permanent residence in the state:
(1) formal declarations of applicant; [Note: this is one reason that it is so important to make your homestead declaration claim]
(2) informal statements of applicant;
(3) the place of employment of the applicant;
(4) the previous permanent residency of the applicant in a state other than Florida, or in another country and the date the non-Florida residency was terminated;
(5) the place where the applicant is registered to vote; [Registration for voting is not a prerequisite to obtaining a homestead exemption. [1953-54 Op.Atty.Gen. 69]
(6) the place of issuance of a driver's license to the applicant;
(7) the place of issuance of a license tag on any motor vehicle owned by the applicant;
(8) the address as listed on federal income tax returns filed by the applicant; and
(9) the previous filing of Florida intangible tax returns by the applicant.

Observations and Case Law: Any one factor is not conclusive of the establishment or nonestablishment of permanent residence. [FS § 196.015] Registration for voting is not, however, a prerequisite to obtaining a homestead exemption. [1953-54 Atty Gen Op 69] An applicant for Florida's homestead tax exemption is not required to be a citizen nor to have purchased Florida license plates for his or her motor vehicles nor to have registered to vote in the county in which the homestead property is located in order to qualify for the homestead tax exemption. Such facts may be looked to by the assessor in making his or her determination of whether the applicant has established his or her "permanent residence" on its property, but the presence or absence of such facts is not conclusive of the establishment or non-establishment of permanent residence. [Op.Atty.Gen., 074- 115, April 10, 1974] A homestead exemption may be claimed by a nonresident of the state who owns property in the state and maintains thereon the permanent residence of another who is legally or naturally dependent on him. [Op.Atty.Gen., 082-27, April 20, 1982] A property owner who was in good faith making the property his home was entitled to homestead exemption under Constitution, notwithstanding that he was not a United States citizen. [Smith v. Voight, 158 Fla. 366, 28 So.2d 426 (1946)] An Alien in this state with a permanent visa, with no intention to apply for citizenship, is entitled to homestead exemption pursuant to this section. [Op.Atty.Gen., 071-242, Aug. 17, 1971] Actual physical presence on property on January 1 is not necessary in order to claim homestead tax exemption. [Poppell v. Padrick, App. 2 Dist., 117 So.2d 435 (1959)] Homestead character of a piece of property is not created by, nor is it dependent upon, any general or specific mental intent on part of owner to create or maintain a certain piece of property as his homestead, but arises and attaches from existence of certain facts in combination in place and time; neither is existence of the homestead in any manner dependent on claiming or failing to claim entitlement to an exemption from and valorem taxes that legislature has by this section conferred on persons who in good faith permanently reside on real property in which they have a certain ownership interest. [In re Newman's Estate, App. 5 Dist., 413 So.2d 140 (1982)] Under Florida law, resident is entitled to homestead exemption unless it is shown that both the owner and owner's family abandoned the property. [In re Kalynych, Bkrtcy.M.D.Fla.2002, 284 B.R. 149] Once property has acquired status of homestead, such status continues until abandonment has occurred. [Poppell v. Padrick, App. 2 Dist., 117 So.2d 435 (1959)] Although the rule seems to be that an absence from one's homestead for an extended length of time is not of itself an abandonment of the homestead, such an absence may raise a presumption sufficient to cast the burden on the person claiming the homestead exemption to satisfy the tax assessor that there has in fact been no abandonment; such an absence may be taken, together with other evidence tending to show an abandonment, to show an abandonment and no actual intention to return to the property and further maintain it as a homestead. [1958 Op.Atty.Gen. 058-329, 058-229 (Revised), Dec. 10, 1958] Mere absence for a long period of time is not of itself sufficient to establish abandonment of homestead and deprive it of its character and tax exemption, where claimant never acquires another homestead, and there is no showing that he did not intend to return. [1958 Op.Atty.Gen. 058-229, July 22, 1958] Rule, that temporary absence will not deprive homestead claimant of his right unless it appears that there was a design of permanent abandonment, applies to homestead tax exemption privilege. [Poppell v. Padrick, App. 2 Dist., 117 So.2d 435 (1959)] Mere absence from one's homestead for health, pleasure or business reasons is not of itself an abandonment, but may be considered, in connection with all other available evidence, in determining whether there has been or has not been an abandonment of the homestead. [1958 Op.Atty.Gen. 058-329, 058-229 (Revised), Dec. 10, 1958] Temporary absence will not deprive homestead of its character and tax exemption. [1958 Op.Atty.Gen. 058-229, July 22, 1958] There must be an intention, either express or implied from facts, to abandon premises as a homestead before owner should be denied homestead exemption from taxation, and a temporary renting of the homestead is not an abandonment thereof, if there is no intention to abandon the premises as a homestead, and no other homestead has been acquired. [1958 Op.Atty.Gen. 058-229, July 22, 1958]

If, upon investigation, the property appraiser finds that the applicant is entitled to the tax exemption applied for under the law, he or she shall make such entries upon the tax rolls of the county as are necessary to allow the exemption to the applicant. If, after due consideration, the property appraiser finds that the applicant is not entitled under the law to the exemption asked for, he or she shall immediately make out a notice of such disapproval, giving his or her reasons therefor, a copy of which notice must be served upon the applicant by the property appraiser either by personal delivery or by registered mail to the post office address given by the applicant. The applicant may appeal to the value adjustment board the decision of the property appraiser refusing to allow the exemption for which application was made, and the board shall review the application and evidence presented to the property appraiser upon which the applicant based the claim for exemption and shall hear the applicant in person or by agent on behalf of his or her right to such exemption. The value adjustment board shall reverse the decision of the property appraiser in the cause and grant exemption to the applicant if in its judgment the applicant is entitled thereto or shall affirm the decision of the property appraiser. [Fla. Stat. 196.151, et. seq.] Opportunity of homeowner to be heard in quasi-judicial proceeding before the Board of Tax Adjustment before denial of his homestead tax exemption met requirements of due process. [Horne v. Markham, 288 So.2d 196 (1973)] The nature and extent of any investigation by the property appraiser concerning the validity of execution and filing of a homestead exemption application or short form renewal card by an agent operating under specific power of attorney are matters that must be administratively determined by the property appraiser pursuant to his express statutory duties to examine and investigate such homestead exemption application form to determine if it complies with Florida Law. [Op.Atty.Gen., 082-99, Dec. 1, 1982] Since no homestead application could be denied except by final action of the Board of Tax Adjustment, decision of tax assessor disapproving late application was a tentative administrative decision which did not require prior notice or hearing. [Horne v. Markham, 288 So.2d 196 (1973)] Where an application for homestead tax exemption was found to be false and the claimant not entitled thereto, after the same had been allowed, the exemption could be withdrawn and denied by the taxing officials, but the taxpayer should have had an opportunity to be heard upon the question of his claim before the tax assessor and the board of county commissioners in full compliance with antecedent to this section. [1961 Op.Atty.Gen., 061-1, Jan. 1, 1961]

We advise all homeowners who have been noticed with denial of homestead tax exemption and subsequent threats of back taxes and liens to immediately contest the lien. We can help. If you would like more free legal information regarding this issue then please contact us. We will send you the information you need to challenge any denial of the tax exemption and win. In the mean time, heed the warnings above and claim your homestead by declaration!