Florida Passes Law Amending Homestead Assessments and Other Taxes

Florida Governor Ron DeSantis recently signed into law House Bill 7061, which amends certain taxes, including the ad valorem (property) tax and its application to homestead property. Other taxes impacted by the bill include, in part, the sales tax, the corporate income tax, and the documentary stamp tax. The bill generally becomes effective on July 1, 2021, except where otherwise specified.

With respect to annual property taxes, Florida permits a limited exemption for homestead property, based on the assessed value of the property. Subject to certain exceptions, homestead property must also be assessed at just value as of January 1 of the year following a change of ownership. For these purposes, a “change of ownership” means any sale, foreclosure, or transfer of legal title or beneficial title in equity to any person, unless one of the enumerated circumstances apply. House Bill 7061 adds two circumstances that are exempt from a “change of ownership” classification and, thereby, in these circumstances, title to homestead property may change without the property being reassessed at just value. 

The first newly added exception requires that: (i) subsequent to the change or transfer, the same person is entitled to the homestead exemption as was previously entitled, (ii) the change or transfer is by means of an instrument in which the owner entitled to the homestead exemption is listed as both grantor and grantee of the real property, and (iii) one or more other individuals, all of whom held title as joint tenants with rights of survivorship with the owner, are named only as grantors and are removed from the title.

The second newly added exception requires that the transfer occur with respect to a property where: (i) multiple owners hold title as joint tenants with rights of survivorship, (ii) one or more owners were entitled to and received the homestead exemption on the property, (iii) the death of one or more owners occurs, and (iv) subsequent to the transfer, the surviving owner or owners previously entitled to and receiving the homestead exemption continue to be entitled to and receive the homestead exemption.

The bill also modifies the assessment of homestead property in certain circumstances, including when changes, additions, or improvements replace all or a portion of the property. Other changes made by the bill include, for example, providing that a modification of certain original documents which changes only the interest rate and is made as the result of the discontinuation of an index to which the original interest rate is referenced is not a renewal and is not subject to the related documentary stamp tax. The bill, here, appears intended to address issues related to the LIBOR transition, which WBK previously covered here.