Many of our clients own one home in Florida and a second in another state, whether it be to visit grandchildren, to maintain work in another state or purely for enjoyment. If you own residential property in Florida and also in another state, we have news you’ll want to pay attention to.
Some Florida counties have been cracking down on Florida Homestead exemption fraud, and you might be surprised to find you owe tens of thousands of dollars in back taxes, penalties and interest.
We are happy to feature this post from Arthur Baker at Baker Hosteler Law:
A Rise in Florida Homestead Exemption Fraud
Imagine that you own one home in Cuyahoga County, Ohio, and another in Sarasota County, Florida. Although Ohio was at one time your principal residence, for the past seven years you have considered your Florida home to be your principal residence because you live in it eight months out of the year, have a Florida driver’s license, are registered to vote in Florida, maintain bank accounts in Florida, and have even filed an affidavit of domicile in Florida. As such, you claimed the Florida homestead exemption on your Florida home in your Florida filings, and for your Ohio state tax filings, filed as a “nonresident,” listing your Florida home as your principal address. However, during the seven-year period your principal residence has been in Florida, the real estate tax bills on your Ohio home continued to provide you with an Owner Occupancy Credit (formerly known as the 2½% Rollback Credit). The Owner Occupancy Credit is a form of homestead or residency-based tax credit that you, in all likelihood, obtained by indicating in a form you executed when you bought your Ohio home that it would be your principal residence. This Owner Occupancy Credit continues to be applied to real estate taxes on your Ohio home until you notify the Ohio taxing authority that your Ohio home is no longer your principal residence.
After seven years of believing you were dutifully paying taxes to Florida and, not realizing you continued to receive a form of residency-based tax credit in Ohio, you receive a notice from the Sarasota County Property Appraiser Office telling you that you owe them $24,436 for back taxes, penalties, and interest because your receipt of the Owner Occupancy Credit in Ohio precluded you from receiving the Florida homestead exemption. You and many other property owners have been faced with or may face this problematic situation.
Historically, property appraiser offices combated Florida homestead exemption fraud through tips from residents that were later investigated by staff at the property appraiser offices themselves. However, the property appraiser offices in Sarasota County, Duval County, and Pinellas County recently hired a firm to crack down on Florida homestead exemption fraud. The firm does not receive an up-front fee and instead is paid a 30 percent commission on any back taxes, penalties, and interest it can recover – giving it a lucrative incentive to find any technical violations.
What To Do About It?
If you are in violation, you can owe thousands of dollars in back taxes, penalties and interest regardless of whether you are “receiving or claiming” another state’s exemption or credit knowingly and willfully, or purely by your own mistake. Even if you have not received a notice yet, you still could receive one in the near term, and having knowledge of this fact may better position you to address such a notice if and when it comes.
Learn more about the Florida homestead exemption and recommendations about what to do if you might be in violation over on the full blog post at Baker Hosteler Law.
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