An important step of estate planning is determining how to protect your estate from property tax and creditors. Florida residents have the unique opportunity to use homestead status to do this.
Homestead status can keep you from going bankrupt after the death of a spouse, during creditor collection efforts or when property taxes would otherwise get the best of you. Here’s how.
Fitting the criteria
Homestead status in Florida works by exempting an unlimited amount of property value from creditor claims. To take advantage of this, there is a certain set of requirements and limitations your property must meet in order to qualify:
- Your homestead property cannot be larger than half an acre if it is in a city or town
- Your homestead property cannot be larger than 160 acres if it is in a rural area
- You must have been named in the legal or beneficial title to the home on the first day of the year you file for exemption
- Your homestead property must be your permanent residence or the permanent residence of a dependent
To file for homestead protection under the Florida Department of Revenue, you must apply after January 1 or before March 1 of the year you want your property to become exempt.
Working with an estate planning professional can help ensure that you have met all of the necessary criteria to gain approval.
When you buy a new home
If you are holding off on filing for homestead protection because you anticipate a move in the next few years, your change in residency may not need to hold you back. For those who change residence within the state of Florida, a homestead assessment difference can be made to transfer your homestead protection to the new estate.