For many property owners, big weeklong sporting events – the Tournament Players Championship at Sawgrass and the Daytona 500, just to name two – are an opportunity to rent their homes to fans, media outlets and the professional athletes and their staff. By renting their homes, however, are owners jeopardizing their homestead exemption, which offers a property tax discount and some protection from higher taxes when tax appraisal values rise quickly?
Until now, the answer depended on whom you asked. SB 342 is one of at least a half dozen real estate-related bills effective today. Sponsored by Sen. John Thrasher (R-St. Augustine) and supported by Florida Realtors, the measure helps to define how long and how often a property may be rented to preserve the homestead exemption.
“St. Johns County hosts the annual Tournament Players Championship at Sawgrass. Volusia County annually hosts a number of motorsport events, and some homeowners want to offer their homes for rent during these annual events but run the risk of losing their homestead exemption by doing so,” says Sen. Thrasher. “This new law will allow homeowners to accommodate visitors and guests annually on a limited, less than 30-day timeframe, without jeopardizing their exemption. This change is good for the homeowner and good for the communities that benefit from the increased revenues brought in by these annual events.”
A law enacted in 1996 stated that a homeowner’s rental of “all or substantially all” of his homesteaded property constituted “abandonment,” thereby removing the homestead exemption. One exception to the abandonment: An owner could rent his homestead after Jan. 1 and not lose his exemption for that calendar year, so long as the property was not rented the previous calendar year.
In the past, property appraisers applied this law in different ways. Some took the position that any rental for two consecutive years constitutes a loss of the exemption in the second year. Others have allowed short-term rentals in consecutive years.
Court decisions also added to the confusion by saying abandonment of a homestead should be decided on a case-by-case basis.
Starting today, however, property owners may rent their homesteads for up to 30 days every year without jeopardizing their homestead exemption. However, they lose the protection of this safe harbor if they rent their property more than 30 days per year for two consecutive years. The law is still unclear regarding how many days beyond the 30-day safe harbor period one can rent in a single year without triggering abandonment of homestead.
“Florida Realtors was happy to work with Sen. Thrasher on this bill,” says Trey Price, public policy representative for Florida Realtors. “This bill simply allows the ‘safe harbor’ of 30 days every year with no danger of losing the homestead exemption.”
For specific questions regarding loss of homestead exemption status for rentals longer than 30 days, property owners should contact their local county property appraiser.
© 2013 Florida Realtors®
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