At the conclusion of our recently held client workshops we open the floor for questions. At all three of the venues a common question arose, “Can I be a Florida resident while my wife remains a resident of northern state?”
My follow up question in each case was, “Why would your wife still want to remain a resident of a state that has income taxes?”
The answer in each case was, “Because I declare our Florida home as our homestead here and she declares our home up north as her homestead there!”
Unfortunately, that is illegal.
Under our Florida law, specifically Florida Statutes §196.031 and Section 6(b) Article VII of the Florida Constitution state that no more than one exemption is allowed to any individual or family unit. Thus, not only can you not claim two Florida homestead exemptions, but you also cannot claim an additional residency-based exemption in another state. Because this applies not only to individuals, but to family units, a spouse cannot claim an exemption in another state while you claim an exemption here in Florida.
Assume, for example, that Harry owns a Florida home and his wife Sally owns their Michigan home, which they have previously homesteaded. Harry claims Florida residency while Sally remains a Michigan resident. Harry then applies for Florida homestead exemption. They have just broken the law, unless Sally renounces her Michigan homestead benefits.
The penalties for fraudulently claiming exemption are severe. According to §193.155 (9) and §196.161 of the Florida Statutes, owners who intentionally cheat on homestead and other exemptions will have a tax lien placed against their properties, be back taxed for up to 10 years (as applicable), be required to pay a substantial penalty (50% of the unpaid taxes for each year) and pay an interest rate of 15% per year.
You don’t want those problems. There are hotlines established to report homestead exemption fraud, which is how most of the violators of these provisions are caught.
Assuming that you have made an honest mistake that you want to correct, you would want to document the removal of other exemptions. You can do so by obtaining a statement from the jurisdiction indicating either that there are no residency based benefits applied, or if there were residency based tax credits or exemptions being applied, then evidence of their removal is required by filing an Out of State Exemption Removal Form.
So, in Harry and Sally’s example, Sally would obtain a confirmation from Michigan that she has renounced her homestead, and would file an Out of State Exemption Removal Form with the county in which Harry is claiming his Florida homestead exemption.
There are limited exceptions to the rules, such as when both spouses are working and must maintain their respective residences. Generally speaking, retired individuals will not qualify under these exceptions. If you have any questions, the Lee County Property Appraiser’s website has a plethora of information – www.leepa.org/GeneralExemptionInfo.aspx