Finance, Taxes, and Property Flashcards
Taxation and Finance
In Florida, there is no income or estate tax. The state may levy taxes by law. The state has the authority to impose taxes on intangibles, such as stocks and bonds. However, the state does not have the authority to levy ad valorem taxes on real estate or tangible personal property. Only the local governments can levy ad valorem taxes on real estate or tangible personal property. However, there is an exemption from ad valorem taxes for state government entities if the property is owned and used exclusively by a municipality for public purposes. If the property is leased to a private for-profit entity, it is not exempt from the ad valorem real estate taxes.
Ad Valorem Exemption for Homestead
Florida citizens are entitled to an exemption from ad valorem real estate taxes on their homestead property. In order to qualify for the tax exemption, the home must be the owner’s primary residence. If the property qualifies, the owner is entitled to a $25,000 exemption from ad valorem taxes, plus an additional $25,000 on non-school taxes for valuations between $50,000 and $75,000. Portability permits the homeowner to use the valuation of a previous homestead as the valuation for another home if the originally owned home is sold and is replaced with another homestead property.
Bonds
In Florida, there are two types of bonds which are used for capital projects:
1) General Obligation Bonds, which require a public vote for approval. These are paid from general tax revenues collected in the state. The project cannot be income-generating; and
2) Revenue Bonds, which do not require a vote for approval. These are income-generating, the revenue from which is used to pay the bonds.
Constitutional Homestead Exemption
In Florida, citizens are provided with a homestead exemption for their primary and permanent residence, which provides protection against creditor claims, with the exceptions of those enumerated in the Constitution:
1) mortgages related to the purchase or improvement of the property;
2) materialmen/mechanic’s liens for improvements; and
3) government tax liens.
Homestead Entitlement
A person is entitled to only one homestead, which must be established as the homestead before a claim is asserted. Establishment of the homestead can occur by registering to vote, vehicle registration, and/or maintaining bank accounts in the county where the property is located, and/or receiving mail at the property. Homestead property is limited to 1/2 acre or less of contiguous land and structures if located in a municipality, or 160 acres of contiguous land and structures if located outside a municipality.
Homestead insofar as Mobile Homes
A mobile home can be classified as either personal property or subject to the homestead exemption if it is not classified as personal property. If the mobile home is registered with the state as a vehicle, it is personal property and not part of the homestead property. However, if the mobile home is not registered and licensed as a mobile home that is easily capable of being moved and has become so annexed to the property that it is determined to be a permanent part of the land, it can be subject to the homestead exemption.
Homestead Conveyance
If property is deemed homestead, one spouse cannot convey the property without the consent of the other spouse, even if the other spouse is not a titled owner of the property, because the homestead exemption is intended to protect the “family’s” primary place of dwelling. In addition, a person cannot devise homestead property away from a spouse and minor children. If a titled owner of homestead passes with a surviving spouse and lineal descendants, the surviving spouse has a life estate and the minor lineal descendants have a vested remainder in fee simple in the homestead property. Upon passing of the surviving spouse, the children would own as tenants in common. In Florida, if real estate is titled in the name of husband and wife, there is a presumption the property is owned as tenants by the entirety (TBE) even if the deed does not specify the owners as husband and wife. Therefore, if the property is jointly titled in the husband and wife, the surviving spouse becomes the sole owner upon the passing of the other spouse through TBE right of survivorship.
Spousal Waiver of Homestead Rights
However, a spouse can waive homestead rights in a valid pre- or post-nuptial agreement. For a pre- or post-nuptial agreement to be valid, it must be in writing, signed by both parties to the marriage, and have been made voluntarily without any duress or undue influence. Also, there is no financial disclosure requirement for such agreements.
Termination of Homestead Status
A homestead status is terminated if there is a valid transfer, devise, or abandonment of homestead property. A transfer can occur by way of selling or gifting the property. Abandonment can occur if the owner permanently gives up possession, manifests an express intent to no longer use the property as a primary residence, or leaves with no intent to return within a reasonable time.
Eminent Domain
Under the Florida Constitution (and the Fifth Amendment, as applicable to states under the Fourteenth Amendment), the government may not take private property under eminent domain unless—
1) the taking is for a public purpose;
2) there is a showing of necessity to take the property; and
3) the government pays full compensation to the owner.
The government may effectuate a taking under eminent domain for use of the property by private individuals or entities without violating the Takings Clause if the development of the property is intended to economically benefit the community, but in Florida, this can only occur if a general law is passed by a 3/5 vote in each of the houses.
Eminent Domain – Inverse Condemnation
Under the Florida Constitution (and the Fifth Amendment, as applicable to states under the Fourteenth Amendment), the government may not take private property under eminent domain unless—
1) the taking is for a public purpose;
2) there is a showing of necessity to take the property; and
3) the government pays full compensation to the owner.
The government may effectuate a taking under eminent domain for use of the property by private individuals or entities without violating the Takings Clause if the development of the property is intended to economically benefit the community. In Florida, this can only occur if a general law is passed by a 3/5 vote in each of the houses. In some instances, although the government has not taken property through eminent domain, government’s actions effectively deprives an owner of use of his property that is sufficient to constitute a taking, although the owner has not received full compensation for such taking. When a taking occurs through government actions as opposed to a formal eminent domain proceeding, the owner can file an inverse condemnation lawsuit against the government based on the over-regulation that is so over-restrictive that it has amounted to a taking. Through inverse condemnation, the owner can seek a declaratory judgment finding that through the government regulations, the property has been seized without authority, which amounts to a taking, and the owner is entitled to full compensation for the deprivation of his property rights.
