Benefits.  Those persons able to take advantage of the homestead exemption are rewarded with a significant reduction in property taxes.  In Florida, every county's Property Appraiser is required to determine the assessed value of every piece of property in the county.  The Appraiser calculates the "Just" or "Fair Market" value of your property which is the price he believes your property would sell for in the open market under normal conditions.  He then subtracts the typical costs incurred in a sale of your property to arrive at the Assessed Value.

For homestead property, the first $25,000 of the Assessed Value is exempt from all taxation.  Also, the $25,000 amount between $50,000 and $75,000 of the Assessed Value is exempt from all property taxes except those levied by school districts.  You can calculate the savings by multiplying the exempt amounts by the county's millage rate.

You also qualify for the benefits of the "Save Our Homes Amendment" which limits the annual increase in the taxable value for homestead property to a maximum of 3% each year.  This can be a huge benefit in times of great appreciation (remember those days?).  No matter how much the market value of your home increases in any year, the amount that your property tax is based on can only increase by 3%.

How to Qualify.  To qualify for the homestead exemption, you must on January 1 of the year for which you are filing be a permanent resident of Florida, own and occupy the property as your permanent residence, and hold title or beneficial interest to the property.

The January 1 date is important.  If you move into the house on January 2, meet every other requirement, and spend every moment for the rest of the year in the home, you will not be entitled to the homestead tax exemption.  You have to be living there on January 1.

Applying for the Homestead Exemption.  If, as of January 1, you meet the qualifications listed above, you may apply for the homestead exemption at the property appraiser's office in your county.  The property appraiser will provide a form for you to complete.  You must sign the application in person at the appraiser's office.  The application must be filed no later than March 1 of the year for wihich the exemption applies.  All persons named on the deed must sign the application, except in the case of husband and wife where only one signature is required.  When applying for the homestead exemption, each of you must provide proof of ownership of the property and proof of Florida residency.

Proof of Ownership.  The following items can be used to provide proof of ownership of the property: Deed (must be recorded in the public records at the time of application), Property Tax Bill, Title Insurance Policy, among other documents.

Proof of Residency.  To show evidence of your Florida residency, you can furnish a valid Florida drivers license or Florida identification card.  Each must have been issued prior to January 1.  You must also furnish one or more of the following items:  Declaration of Domicile (dated prior to January 1), Florida vehicle registration or the previous year's federal tax return showing a Florida residence.  If you are a resident alien, a permanent visa card or temporary visa card with official assurance that permanent resident status is approved must be presented.

Remember, you must apply no later than March 1 or you will lose a valuable aspect of Florida residency. You can read more about this and other Florida residency topics in The Official Snowbird's Guide To Becoming A Florida Resident.

For anyone who thought that the whole world doesn’t want to move to Florida:

I just discovered that The Official Snowbird’s Guide to Becoming a Florida Resident, is available in India and Sri Lanka. Check out the link below:

http://www.infibeam.com/Books/info/dean-hanewinckel/official-snowbird-s-guide-becoming-florida-resident/9780981823300.html

It also appears to be a big hit in countries that don’t use our alphabet:

http://www.dlth.in.th/amazon/0981823300/The_Official_Snowbird_s_Guide_to_Becoming_a_Florida_Resident.html

I know what your thinking. But it’s still billions of potential buyers.

This post discusses an important issue that anyone who wants to purchase a condominium unit in Florida must consider.  The downturn in the Florida real estate market has magnified this problem.

Condominium Association Solvency.

Under the Florida Condominium Law, a lender (under a first mortgage) that acquires title to a condominium unit as a result of foreclosure is only liable for the assessments accrued during the six months immediately preceding.  Keeping this in mind, let’s take a look at this scenario, one that exists in a lot of condominium projects in Florida.

A developer obtained a multi-million dollar development loan to build and sell his condominium project.  After much of the project was built, but before most of the units were sold, the real estate market crashed.   At this time unit purchasers had closed on 20% of the total units, leaving 80% unsold and unoccupied.   Because of his inability to sell the remaining units and to make the payments under the loan, the developer went bankrupt and abandoned the project.  The lender was in no hurry to begin foreclosure proceedings on the unsold units for 2 reasons: (1) If it acquired title to the units, it would have to start paying the condominium assessments for all of those units, (2)  Since there was no market for the units, it is likely that the lender would own the units for a substantial period of time, all the while being liable for the assessments.

It was easier and less expensive for the lender to hold off on the foreclosure until the market improved.  In the meantime, the association and the unit owners (remember only 20% of the units had sold) did not have enough income through assessments to pay the common expenses of the condominium.  This meant that common area utilities, maintenance, security and, most importantly, insurance could not be properly funded.  If the foreclosure sale did not occur for 2 years, then the association would not receive assessments from 80% of the units for 18 months.  This would put an incredible burden on the existing unit owners.

If you are looking to purchase a condominium, it is important that you find out the ownership and occupancy rate of the project.  Many of these problems are concentrated in the new projects.  Older, more established condominium communities generally have a more stable ownership structure, although there are defaults on mortgages for individual units out there also.

Even though you may be able to acquire a condominium unit at an exceptional bargain, you should investigate this situation and then assess the risk of your purchase.

Visit the link below for an article from the Palm Beach Post that illustrates this issue:

http://www.palmbeachpost.com/search/content/accent/epaper/2009/09/13/condo_0913.html

These days, there are some incredible bargains in Florida real estate . . . especially condominiums.  Just before the downturn in the real estate market, condominium development was at near-record levels.  Now, there is an abundance of new, unsold condominium units, many being sold for pennies on the dollar.  For investors and second-home buyers, this creates an opportunity that may not come around for decades.

However, a condominium is a completely different animal than what you’ve been used to. It all starts with the ownership concept. First of all, most people refer to the apartment in which they will be living as their “condominium.” Actually, the condominium is the entire project consisting of all of the apartments, the grounds, the parking areas and, in most cases, the recreational facilities. Your apartment is referred to as a “unit.” All the rest of the condominium is known as the “common elements.” You have exclusive ownership of your unit and you share in the ownership of the common elements with all of the other unit owners. The law says that all of you have an undivided ownership in the common elements. This means every unit owner has the right to enjoy the common elements and the obligation to maintain them.

As you may guess, this arrangement, without guidelines and management, could lead to utter chaos. Each unit owner would assert his or her own personal and selfish preferences as to the use of the common elements and many would not want to pay their fair share of the expenses.

Because of the close proximity to your neighbors, the need to regulate the use of the common elements and the necessity of insuring, maintaining and repairing the common elements, certain rules and restrictions must exist. These rules and restrictions are found in the condominium documents. A brief list of the documents is as follows:

1. Declaration of Condominium. This is the main document of the condominium. The Declaration actually creates the condominium. It describes the units and common elements, defines certain unit owner rights, authorizes creation of the association and regulates the use and operation of the common elements.

2. Articles of Incorporation of the Association. This document creates the condominium association. It is filed with the Florida Department of State.

3. Bylaws of the Association. These are the guidelines for the operation of the association. The bylaws set forth the number of directors, prescribes the procedures of unit owner and board of directors meetings and defines the financial and budget matters of the association.

4. Operating Budget. This document describes the common expenses of the association, which are divided among the unit owners in the same proportion as the ownership interest in the common elements.

5. Rules and Regulations. These are enacted by the board of directors and generally consist of restrictions pertaining to the use of the common elements.

Purchasing a Condominium Unit

If you have decided that condominium life is right for you, you may wish to purchase a unit. The purchase of a condominium unit involves many of the same considerations as a single family home. However, because of the unique nature of condominiums, there are other factors to consider.

There are two circumstances in purchasing a condominium unit which are treated differently under the law. There are different requirements depending on whether you are purchasing from a developer or from the prior unit owner. This Guide will concentrate on purchasing from a Developer.

Purchasing from a Developer

If you are purchasing a unit in a new project from the developer, the Florida condominium law has provisions to make sure you are informed. Every developer of a residential condominium is required to submit the condominium documents to the Division of Florida Land Sales, Condominiums, and Mobile Homes for review. The developer may not enter into contracts for the purchase and sale of a unit until it has submitted these documents and the Division has acknowledged that the documents were property submitted.

Reservation Program

However, prior to the submission of these documents, the developer may enter into reservation agreements with prospective purchasers and accept reservation deposits. Many developers do this to create interest in a project and to test the marketability. By entering into a reservation agreement, you reserve your right to enter into a contract to purchase a certain unit in the condominium. You may cancel your reservation and receive a full refund of your deposit at any time and for any reason. The developer may also decide not the build the project, in which case it must promptly refund your deposit.

After the division has acknowledged that the condominium documents were properly submitted, the developer may enter into binding contracts for the sale of units. At this time the developer may ask you to enter into a contract to purchase your unit and transfer the reservation deposit into a sales deposit.

Buying the Unit

The developer will present you with a purchase contract and a set of disclosure documents. From the later of the date you sign the contract or from the date you receive the disclosure documents, you will have 15 days to rescind the contract. If for any reason during those 15 days you decide you do not wish to purchase the unit, you may inform the developer in writing and the contract will be cancelled and your deposit fully refunded. This period is designed to provide you with an opportunity to review the disclosure documents.

When you receive the disclosure documents, the developer will ask you to sign a receipt of condominium documents. This is a form required by the division to verify on which date you received the disclosure documents. You should make sure that you have actually received all of the documents indicated on the receipt. If so, then you should sign the receipt and write the date where indicated. It is very important that you accurately post the date, as it will likely mark the beginning of the 15 day rescission period.

My next post will discuss some of the factors you should be aware of when purchasing a condominium in this economic environment.

Buffalo Sabres owner, Thomas Golisano, announced Thursday he is changing his residence from New York to Florida, citing the burden of income and property taxes in New York. Golisano is the founder and chairman of Paychex, Inc., and a former candidate for governor of New York.

Golisano made the announcement during his speech at the 2009 Financial Executive of the Year Awards luncheon, which is co-presented by the Rochester Business Journal, showing his Florida driver’s license in a slide accompanying the presentation.

In his speech, Golisano said the move to Florida will save him more than $13,000 in income taxes each day.

This is another high profile example of the attraction of Florida residency as a solution to high taxes and poor business climates.  For the full article click the link below:

        http://www.rbj.net/fullarticle.cfm?sdid=78345

Payment of Ad Valorem Taxes.

In Florida, ad valorem taxes are paid in arrears and are based on the calendar year from January 1 to December 31. Tax bills are mailed to the owner of record of the property on November 1 of each year. If the owner has a mortgage on the property and taxes are paid from an escrow account established by the lender, the bill will usually be sent to the mortgage company and the owner will receive an informational notice. If the tax is paid during the month of November, the owner will receive a 4% discount. Thereafter, a 3% discount is allowed in December, a 2% discount in January, a 1% discount in February, and no discount is allowed in March. Taxes become delinquent on April 1.

Delinquent Taxes.

If an owner has not paid the property taxes by April 1, the Tax Collector is required by law to advertise the delinquent parcels in a local newspaper once a week for three consecutive weeks. All fees for advertising and collection are added to the delinquent taxpayer’s bill.

On or before June 1, the Tax Collector is required to hold a tax certificate sale. At this sale, citizens may purchase certificates by paying off the owed tax debt. The sale is an auction with participants bidding by the amount of interest rate for the return on the tax debt amount. The bidding begins at 18% and continues downward. The certificate is awarded to the bidder willing to accept the lowest interest rate. The certificate is a valid first lien on the property securing the amount of delinquent taxes plus accrued interest, penalties and advertising fees. If a certificate is redeemed the Tax Collector pays the certificate holder the amount due to him or her. The certificate holder may apply for a tax deed when two or more years have elapsed since the date of delinquency. If the property owner fails to pay the tax debt, the tax deed is sold at public auction.

Installment Payment Plan.

You have an option to pay your real estate taxes quarterly. You must fill out and return an Installment Plan application form to the Tax Collector’s Office prior to May 1.

Non Ad Valorem Assessments.

Also included on your tax bill are assessments not based on the value of the property. These non ad valorem assessments are levied by authorities such as stormwater utility, fire and rescue, solid waste collections and sewer utilities. The assessment periods vary and may be based on some other period than the calendar year. Also some non ad valorem assessments are paid in advance.

There is a lot of confusion surrounding the issue of titling your homestead into your revocable trust. Many clients have said that they have been told that you cannot transfer homestead into a revocable trust. If this were the case, a major asset of most people’s estates would be left vulnerable to probate.

In order to fully address this issue, we have to delve into the complexities of the Florida homestead law. The law regarding Florida homestead is set forth in the state constitution as well as various sections of the Florida Statutes. It cover three distinct areas.

The first area, which most people are familiar with, concerns the exemption from property tax of the first $25,000 in value.

The second aspect involves the exemption of homestead from the claims of creditors.

The third area is what we will be discussing today. It deals with what happens to homestead property when its owner dies. The restrictions contained in this part of the law deal only with married persons or persons with minor children. If you are a single person without minor children, there are no restrictions and you may transfer your property to your trust without any adverse consequences.

However, if you are married, Florida law states that your homestead may not be devised if the you are survived by a spouse, unless it is devised to that spouse.

If a married person tries to leave his interest in the homestead to someone other than his spouse, that transfer under law would be void. Instead, the law says that in this case, the spouse would receive a life estate in the property and at the spouse’s death such interest would pass to the lineal descendants of the person who died first.

As you can guess, this creates huge title problems for the surviving spouse. She would not be able to sell the homestead or put a mortgage on it without the consent of the deceased spouse’s lineal descendants.

What, you may ask, does this have to do with my trust? Some attorneys and title examiners believe that leaving the property in joint trust after the death of one spouse is different from leaving it directly to the spouse, as required by the homestead law. They contend that this causes the ugly life estate scenario and that any future transactions will require consent of the lineal descendants.

Because of this, I structure your trust to distribute the deceased spouse’s share of the homestead directly to the surviving spouse. The surviving spouse would then deed that interest back into the trust. In this way we comply with the homestead law and avoid probate.

One exception to titling your homestead into the trust is when you have minor children. In this situation the law states, ”

Because property owned by husband and wife as tenants by the entireties is exempt from this provision, the property should not be put into the trust if you have minor children.

It is also worth noting that transfer of your property to your revocable trust does not affect the homestead tax exemption or the value of the property under the “Save Our Homes” amendment.

In a story released by the Florida Association of Realtors (FAR), Florida’s existing home sales rose in December, making it the fourth consecutive month that sales activity demonstrated gains in the year-to-year comparison, according to the latest housing data. 

Existing home sales rose 27 percent in December 2008, with a total of 11,053 homes sold statewide compared to 8,712 homes sold in December 2007, according to FAR. December’s statewide existing home sales were 28.9 percent higher than November’s statewide sales.

CLICK HERE FOR THE FULL STORY.

New residents of Florida as well as visitors will find our state to be a golfer’s paradise.  Florida has 1,468 golf courses to choose from and almost all of them can be played year round.  Many resorts offer packages to make golf vacations unique and affordable.  More information on Golf in Florida can be found at the Florida Golfer Guide.

If you want to enjoy golf in Florida as a RESIDENT, click here