Question: We consider Florida our second home. Can we claim the homestead exemption?

Answer: Only permanent residents of Florida are entitled to claim a homestead exemption, and only on their primary residence.

In addition to a modest reduction in the assessed value of the real property ($25,000 is fully exempt and the second $25,000 is exempt except for school district levies) for ad valorem tax purposes, homestead status results in a cap on the amount by which the assessed value can increase each year. When the homestead exemption is claimed by someone who does not qualify, there can be substantial financial repercussions. The county property appraiser can file a tax lien that goes back up to 10 years. The lien includes not only the taxes that would have been paid, but a penalty of 50 percent of the unpaid taxes for each year, plus 15 percent interest on the entire amount. This can more than triple the amount of the lien. As property values fall in Florida, the county property appraiser will look at each exemption to make sure revenues are not diminished by false or fraudulent applications for homestead and/or annual renewals of the homestead exemptions.

If you think that is punitive, consider the recent case of a Kentucky resident who claimed the homestead exemption for property he owned and was renting out in the Florida Keys. After an investigation by the county property appraiser’s office, it was determined that his application for homestead exemption was fraudulent, and he was arrested and now faces up to a year in jail and a $5,000 fine. A spokesperson for the county property appraiser said that many people have been canceling their exemptions. Is it any wonder why?