Sunday, March 08, 2015

SURVIVING SPOUSE NOT OBLIGATED TO REFILE HOMESTEAD EXEMPTION–MARTIN COUNTY’S $283,070 TAX BILL VOIDED [FLORIDA]

Florida taxpayers that apply for and receive a homestead exemption receive a reduction on their ad valorem taxes. Perhaps more importantly, the homestead become subject to the "Save Our Homes" annual 3% limit on increases in value of the homestead for ad valorem purposes.

A husband purchased a residence in Martin County in 1985 and applied for and received homestead exemption. In 1985 he married and in 2000 he conveyed the house to himself and his wife as tenants by the entireties. Both the husband and the wife occupy the house as their primary residence. The wife never applied for homestead exemption in her name.

The husband died in 2006. The wife did not notify the property appraiser of his demise, and did not apply for homestead exemption. From 2007 to 2011, the property appraiser allowed a reduced tax for homestead and applied the Save Our Homes assessment cap to the wife. After learning about the husband's death in 2012, the property appraiser sought to collect $283,070.45 for additional taxes due to the reversal of homestead status from 2007 to 2011, plus a 50% penalty and 15% interest per year, since the wife never applied for homestead in her own name.

At first review, one might side with the property appraiser. Florida Statutes Section 196.011(9)(a) provides that a county may allow for automatic renewal of homestead status without the need for an annual application or statement. However, that statute provides "Notwithstanding such waiver, refiling of an application or statement shall be required when any property granted an exemption is sold or otherwise disposed of, when the ownership changes in any manner, when the applicant for homestead exemption ceases to use the property as his or her homestead, or when the status of the owner changes so as to change the exempt status of the property” (emphasis added). Ownership did change when the husband died, although the statute does not define "ownership change" for this purpose. Further, the above statute also applies when one's "ceases to use the property as his or her homestead" - it would seem the husband met that test when he died.

Florida Statutes Section 193.155(3)(a), in addressing assessments under the Save Our Homes assessment cap, also discusses changes of ownership. Unlike Chapter 196, this provision does define "change of ownership" and specifically provides transfers of legal or equitable title between a husband and wife, including a change to a surviving spouse is not a change of ownership. However, since this definition is in a different Chapter than Chapter 196, and that the cited provision says it applies only for purposes of that Section, one would think that provision does not apply for purposes of Section 196.011(9)(a).

Nonetheless, both the trial court and the Fourth DCA have ruled that the definition of change of ownership under the Save Our Homes provision should apply for purposes of defining an ownership change in Section 196.011(9)(a). The Fourth DCA said that “[t]o interpret otherwise would create a conundrum, where a surviving spouse would qualify for renewal of the “Save Our Homes” assessment cap but not for renewal of the homestead exception. Such a result is not consistent with the homestead exemption's purpose of shielding Floridians from undue financial hardship related to a home after a person has experienced one of life's most stressful events, the death of a spouse.”

The Fourth DCA also relied on the legal fiction that because entireties law views the cotenants as one owner, there was no change of ownership when the husband died.

The courts were correct that there would be a conundrum and a disconnect if the wife here obtain the benefit of the Save Our Homes assessment limitations if the property did not otherwise qualify for homestead exemption status, and thus this probably justified its liberal statutory interpretation. The case also serves as a useful reminder that heirs of a decedent that succeed to homestead property need to file their own homestead application if they will use that property as their homestead. Conservatively, even surviving joint tenants by the entireties should do so, unless they reside in the Fourth DCA and thus can rely on this case.

AUREL KELLY, as Martin County Property Appraiser, and RUTH PIETRUSZEWSKI, as Martin County Tax Collector v. MARY JANE SPAIN, 40 Fla. L. Weekly D513a, 4th District. Case No. 4D14-510, February 25, 2015.

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