Florida allows for real estate tax relief when you own your primary residence in Florida (“Homestead”). The exemption is referred to as the property owner’s “Homestead Tax Exemption.” This tax relief is an enormous benefit because it includes a reduction in the value of your Homestead for tax purposes, as well as a cap on any increase in the taxable value of your Homestead.
If you are tempted to rent your Homestead for a brief period (“a Short Term Rental”) for extra income, beware of the limitations you have to do so and still retain your valuable Homestead Tax Exemption.
Florida law states:
“The rental of all or substantially all of a dwelling previously claimed to be a homestead for tax purposes shall constitute the abandonment of such dwelling as a homestead, and the abandonment continues until the dwelling is physically occupied by the owner. However, such abandonment of the homestead after January 1 of any year does not affect the homestead exemption for tax purposes for that particular year unless the property is rented for more than 30 days per calendar year for 2 consecutive years.”
If you rent all or substantially all of your Homestead for more than thirty days for two consecutive years, you risk losing your Homestead Tax Exemption.
Renting your Homestead and claiming the Homestead Tax Exemption can lead to heavy penalties and interest, along with the revocation of your Homestead Tax Exemption. The look back period, meaning the period of time the taxing authority may audit for prior years to see if your Homestead was rented, is the prior ten years.
Florida short term rentals incur a tax for a rental of six months or less. The taxing authorities can easily check websites such as www.Airbnb.com for real estate rentals and cross reference the property to see if the owner claims a Homestead Tax Exemption. A Homestead owner may want to think twice before renting their Homestead. Making a mistake can be costly – very costly.
If you have questions about your Florida Homestead, about the Homestead Tax Exemption, or any other inquiry about Homestead in Florida, contact our knowledgeable real estate attorneys at 813-852-6500.