Last month, we discussed the value and importance of filing for homestead exemption. We looked at it through the lens of property taxes and how much money you could save. However, this series’s title also mentions how you can protect your home, and this month’s article closely examines how the homestead exemption can achieve that.
Protection from Creditors
As frightening as it may be, imagine a scenario involving a car accident where you are at fault. Because several other cars were involved, you don’t have enough liability insurance to cover other people’s property and medical bills. If you ultimately have a recorded judgment against you, someone could come after your assets and home or have a lien placed against your property. Although this is a fictitious scenario, that doesn’t mean it can’t happen. Ask yourself whether you are protected. Those who have filed for homestead exemptions will likely say that they are.
The Florida Homestead applies to everything from single-family homes to mobile homes, as long as they are your primary residence. You should also note that your home is protected regardless of its worth, but it limits how much land you can safeguard. It restricts you to your property size up to ½ acre if you live within a city and 160 acres outside of a city. (We will discuss how much it can appreciate in the final section.)
The homestead exemption does not protect your home if it was bought with funds connected to illegal activity. Mechanics' liens are also not covered because you likely owe someone money for improving the home you are trying to protect. Remember, most people already have liens on their homes because they borrowed money to purchase them. Defaulting on your mortgage or a home equity loan still enables a creditor (lender) to seize it.
Because the homestead exemption can be applied to condominiums, we must address special assessments and HOA dues. Special assessments on condominiums can be significant, and it isn’t impossible to be told you owe upwards of $10,000 after an HOA meeting where a vote was held. Failing to pay dues or assessments could result in a lien being placed on your home. You are not covered if you file for a homestead exemption after a lien of this nature has been filed.
Another Area of Consideration
We are emerging from a very hot real estate market, which is accounted for in the homestead exemption. Under our Florida “Save Our Homes” Amendment to the Florida Constitution, your home’s assessed value cannot increase by more than 3% annually. It cannot exceed the inflation rate if it hasn’t reached 3%. When you sell your home, you can carry over the Save Our Homes protection onto your new one.
Meet with Spectrum Title Services, LLC
When you are ready to buy, sell or refinance your home, contact the trusted team at Spectrum Title Services, LLC. If you have a homestead on your current home, we can explain how you can obtain one on your new purchase to limit your potential tax burden. Contact us today for all residential and commercial real estate closings to schedule your consultation.