Daily Tax Report: State

INSIGHT: Camping Doesn’t Count as Occupancy for Florida Homestead Exemption

Nov. 15, 2019, 2:00 PM

A Florida couple wasn’t entitled to the Florida homestead property tax exemption despite spending a few nights in a tent on their property while their future home was under construction.

In July 2013, L. Lowry and Jennifer Baldwin sold their residence and abandoned their homestead. On July 10, 2013, the Baldwins purchased another property with a house on it. They did not, however, move into that house. Instead, in November 2013, the Baldwins demolished the existing house and began construction of a new house on the property. During construction of the new house, the Baldwins resided at a leased condominium unit and rented a storage unit to house their furniture and personal items. They were able to use the dock on the premises of the subject property while their new house was being constructed.

When it became apparent that construction would not be completed by the end of 2014, the Baldwins pitched a tent on the subject property on Dec. 26, 2014, and spent the night on the subject property. The new house received a temporary certificate of occupancy on June 9, 2015, and the Baldwins moved into the new home on June 11, 2015. On Jan. 8, 2016, the new house received a final certificate of occupancy.

The Baldwins timely applied for “homestead exemption” for their new property for tax year 2015. Their application was denied. The trial court upheld the denial noting that “although the Baldwins undoubtedly intended for the subject property to become their permanent residence at some point in the future, the Baldwins had not yet made the subject property their permanent residence as of January 1, 2015.”

The Florida District Court of Appeal of affirmed the trial court decision. (Baldwin v. Henriquez, No. 2D18-2658 (Fla. Dist. Ct. App. 9/13/29)).

Maintaining A Permanent Residence

The constitutional provision providing for a tax exemption for homestead property is found in Article VII of the Florida Constitution. It provides a $25,000 tax exemption for property on which the owner “maintains his or her permanent residence.” On appeal, the Baldwins argued that the trial court misapplied the law by focusing too heavily on their lack of physical occupancy of the subject property. They maintained that they were entitled to a homestead exemption for their property even though they were unable to physically occupy the subject property as of Jan. 1, 2015, because they manifested an intent to establish a permanent residence on the subject property and did specific acts in furtherance of this intent. They manifested their intent by changing their licenses and voter registration cards and abandoning their prior homestead.

The Baldwins rely heavily on Semple v. Semple where the Florida Supreme Court explained that: “where it is clearly the manifest intention of the owner to occupy the premises immediately as a home, and this intention is evidenced by specific acts...the homestead character will attach.”

The state constitution, the court noted, “provides that every person who had the legal or equitable title to real estate and maintains thereon the permanent residence of the owner...shall be exempt from taxation thereon.” Here, the Baldwins owned legal title to the real estate for which they were claiming an exemption. They were, therefore, entitled to an exemption if they “maintained thereon their permanent residence.”

The court first addressed what it means “to maintain” the permanent residence. Maintain is defined as: to keep in an existing state; preserve or retain; and to keep in a condition of good repair or efficiency. Obviously, the court observed, the residence must be already in existence before it can be maintained. One cannot keep “in a condition of good repair” a residence that has not yet been constructed. In other words, the court noted, “the plain and ordinary language of our constitution leads us to the inescapable conclusion that a taxpayer cannot ‘maintain’ his or her residence until the property that he or she is ‘maintaining’ actually constitutes the taxpayer’s residence…Here, the Baldwins never maintained their residence on the subject property until the new structure was completed in June 2015.”

Residence is defined in part as “bodily presence as an inhabitant in a given place.” The plain and ordinary understanding of the word, residence, means a “dwelling” in which one had “bodily presence as an inhabitant.” A not-yet-completed structure that has never been physically occupied by the owner does not fit within this plain and ordinary understanding of the term, residence. The Baldwins did not physically live in a dwelling on the subject property until June 2015.

“Accordingly, based on the plain and ordinary meaning of the constitutional provision providing the homestead exemption, to ‘maintain’ ‘the permanent residence’ on a piece of property, a taxpayer must preserve and continue in possession of a dwelling that the taxpayer physically occupies as a home.” We are, the court concluded, “compelled to hold that the Baldwins are not entitled to a homestead exemption for their residential property for tax year 2015 because they did not maintain their permanent residence on the property until June 11, 2015, the date that they moved onto the subject property and the first time they physically occupied a house on that property.” “Actual occupancy is essential to a homestead claim.”

Intent Not Sufficient

This conclusion, the court went on to say, is not contradicted by the Supreme Court’s holding in Semple v. Semple. There, the Court emphasized that the “homestead character” will attach to property where the owner manifests an intention to occupy the premises immediately as a home. “In emphasizing the intent aspect of Semple v. Semple, the Baldwins ignore the temporal component. The Baldwins clearly intended to occupy the premises as a home, but only at some undeterminable point in the future after construction was completed.”

Because the Baldwins did not use or occupy the property as a home until six months into the year for which they were claiming the exemption, they did not manifest an intention to “occupy the premises immediately as a home.”

“A lot without a livable residence cannot be a homestead if only the owner intends to build a house and live there at some point in the future.” See Clements v. Farhood. Because the Baldwins did not maintain the subject property as their permanent residence on Jan. 1, 2015, they were not entitled to a homestead exemption on the property for tax year 2015.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Robert Willens is president of the tax and consulting firm Robert Willens LLC in New York and an adjunct professor of finance at Columbia University Graduate School of Business.

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