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Understanding the Florida Homestead Exemption

Family using the homestead exemption

When it comes to filing for bankruptcy, one of the biggest concerns filers have involves losing everything, including their home. However, bankruptcy exemptions exist to help avoid these concerns.

Specifically, the Florida homestead exemption will protect the filer’s home in the event of a bankruptcy. However, it is important to understand how this exemption works and whether it applies in the filer’s specific situation.

Using the Homestead Exemption

Florida’s Homestead Exemption Statute is found in the Florida Constitution under Article 10, Section 4 and the Florida state statutes at Statutes Annotated § 222.01 through § 222.05. The homestead exemption allows homeowners to protect the value of their homes from creditors in the event of a bankruptcy.

The exemption considers the equity in the debtor’s home to be an asset in a Chapter 7 filing. Only if the homeowner cannot exempt that equity can the bankruptcy trustee liquidate the house to pay back creditors. In a Chapter 13 bankruptcy, an equity that is not exempted can end up being paid to unsecured creditors.

The exemption keeps creditors from having access to this equity and lets the homeowners stay in their residences during the bankruptcy. It gives peace of mind and ensures the debtors that their whole lives will not end up thrown off because of the bankruptcy.

The Florida Homestead Exemption

The State of Florida offers one of the more generous exemptions in the United States. Homeowners can exempt an unlimited value in their home or property covered under the statute.

However, the property does have a limit in size. Property larger than half an acre in an urban area or 160 acres in rural locations, cannot be exempted. In addition, the homeowner must have owned his or her home for a specific period of time to qualify for the homestead exemption.

One important caveat that should be kept in mind is that Florida Bankruptcy exemptions do not automatically apply simply because the person filing lives in Florida. The individual must have lived in Florida for two years before the laws will qualify.

This residency requirement has been instituted in an effort to keep debtors from “forum shopping,” by choosing states with the most debtor-friendly bankruptcy exemptions. In the past, many people have chosen to move to Florida before filing for bankruptcy because of the unlimited homestead exemption. This residency requirement helps eliminate that issue.

If someone recently moved to Florida, the bankruptcy case will take the exemptions from the state where the debtor spent the most time for the 180-day period before the two-year “look-back” period.

Attached or contiguous property can be included in the homestead exemption, and this property can include lots with legal descriptions and tax numbers different than the actual residence. However, mobile homes do not qualify as a homestead, and investment property is not covered either.

Using the Homestead Exemption for Married Couples

Under Florida law, a married couple filing a joint bankruptcy may take the amount allowed in the homestead exemption and double it. However, unlike other states, this difference may not mean as much since the Florida homestead exemption is unlimited anyway.

Limits on the Florida Homestead Exemption

The Florida Homestead Exemption does come with its limits and restrictions. Under the state’s homestead exemption, real or personal property is covered so long as the property is the debtor’s residence. It can also be claimed by the spouse or child if the owner is deceased. To be able to claim the full value of the state’s homestead exemption, the debtor must have bought and owned the property for at least 1,215 days before filing for bankruptcy.

If the debtor cannot meet this requirement, his or her exemption is limited by federal law. A bankruptcy attorney can work with the debtor to ensure that this requirement is met before filing. If the debtor is close to that time period, he or she may be better off waiting to file, allowing the deadline to be reached to protect the property.

Can the Federal Bankruptcy Exemption Be Used?

In some states, filers have the option of using either the state exemptions or federal exemptions, but they must choose one or the other. However, in Florida, bankruptcy debtors must use the state’s exemptions only since Florida is one of the “opt-in” states that only use the state’s bankruptcy exemptions instead of giving debtors a choice of one or the other.

Contact Us Today

At RLC Lawyers & Consultants, we are here to walk you through this stressful process of bankruptcy. To request to schedule a free consultation, please call us at 561.571.9610 or send an email to