Foreign Persons and Florida’s Homestead Exemption

Just how far does Florida Constitution’s homestead ad valorem tax exemption extend? Recently, the Florida Supreme Court decided this issue in Garcia v. Andonie, 65 So.3d 515 (2011). In Andonie, the Court held that if the resident children of a non-resident reside on property owned by the non-resident, the property may qualify for the ad valorem tax exemption. Andonie involved Honduran parents who resided in a Florida condominium with their children. The children were United States citizens, but the parents were not. The parents did not have a legal right to remain indefinitely in the United States. Under Florida law, every person who has the legal or benificial title to real property in the state and who resides thereon as his or her permanent residence, or the permanent residence of his or her self and their dependants, is entitled to an exemption. Fla.Stats. §196.031(1). Under the Florida Constitution, however, every person who has the legal or equitable title to real estate and maintains thereon the permanent residence of the owner, or another legally or naturally dependent upon the owner, shall be exempt from taxation thereon. Fla. Const. Article VII, §6(a).

The property appraiser argued that the parents must be residing indefinitely in order for the property to qualify under the Florida statute. Therefore, because the parents could not, as a matter of law, indefinitely reside on the property, the property must not be subject to the exemption. Nonetheless, the Court rejected the property appraiser’s argument and interpreted the Florida Statute as adding another layer to the constitutional provision.

Unlike the Florida statute, the Constitutional provision does not require that the owners reside on the property to qualify for the exemption. Under the constitutional provision, as long as the person or persons holding the title maintain a residence on the property for themselves or for their dependents, the property is exempt from taxation. The property appraiser unsuccessfully argued that a hypothetical situation might arise in the future where the parents might not use the property for the permanent residence of their children who were common law residents of Honduras. However, the Court maintained that as long as the children were United States citizens and dependents (or minors), the property would be eligible for the homestead exemption. It remains to be seen whether the Court’s strict construction will force United States citizenship to be the sole criterion for residence requirements or just an important factor for residence. Potentially the Court’s ruling could lead to substantial tax savings for foreign residents of South Florida, which is a hub for Latin American and other financial institutions. Not only does the homestead exemption apply to ad valorem tax assessments, but, by virtue of the property being eligible for the homestead exemption, the three percent cap on increases in property valuation is applicable to the property.

The long-term results of Andonie remain to be seen, but this is a decision that makes Florida real estate all that more attractive to out-of-state and foreign persons. The experienced legal team at Chepenik Trushin is ready, willing, and able to answer any questions you my have concerning the Florida homested exemption or other issues pertaining to property ownership and taxation in the state. Please do not hesitate to contact us.