How to reduce your taxes, if you have U.S. born dependents living permanently in your Florida home
There has been a very interesting Florida Supreme Court decision this past week that has to do with Homestead Exemption and who qualifies for it. Basically it expands this benefit to a large group of people that could not claim that deduction before. What this exemption does is reduce the amount of property taxes you have to pay every year and eliminates swings in what property taxes are from one year to the next.
It is particularly relevant to foreign nationals that have
purchased a residence and have children with US citizenship permanently residing in the property even if parents are not permanent residents in the same property.
Before it was the understanding that to qualify for Homestead Exemption this had to be the homeowner’s permanent residence, but the court said that’s not necessary – the constitution also allows homeowners in Florida to claim a homestead exemption if another person "legally or naturally dependent on the owner" lives in the home permanently.
The court also said that the state statute governing the homestead exemption has an invalid phrase in it because it limits the homestead exemption to anyone who "resides thereon," referring to the property. However, similar language was removed from the constitution in 1968 – invalidating the requirement that the homeowner actually reside there, as long as a dependent does.
So, to give an example of who would now qualify (and I have seen this situation multiple times), if a family with US born children recently purchased a property and is living legally in the US (even with homeowner commuting a few times a month between Florida and another country) this family will be able to claim a $50,000 deduction on the appraised value of the home. Think of this as a $1,000 saving every year. But that is not the only benefit. Beginning the year after you receive homestead exemption, the assessment on your home cannot increase by more than the lesser of either the change in the Consumer Price Index or 3% each year, no matter how much the fair market value increases.
Without the Homestead Exemption the new "market value" would be the new "appraised value" of your property. Now the benefit to those that qualify for Homestead Exemption is that it brings greater stability as you know how much you will pay in property taxes. Take into consideration the double digit price moves (we are talking percentage increase/decrease from previous year) that we have had this past decade!
Miami is a financial hub and home base for families with Central and South American businesses. As such, it becomes home to thousands of investors, company representatives and foreign regulatory officials who purchase
condominiums. Their children attend Florida schools, both public and private – and sometimes their children have claim to U.S. citizenship because they’re born here. So the consequences for
South Florida real estate from this decision are only positive.