Renting Out Your Florida Home: What Happens to Your Homestead Exemption?

You've rented your house out, or you're about to, and somebody has told you the homestead exemption "goes away." That's roughly right and not very useful. What owners actually need to know is when it goes away, who they're supposed to tell, and how much the tax bill moves.

Renting the house out abandons the homestead

Section 196.061 of the Florida Statutes says that renting all or substantially all of a dwelling previously claimed as a homestead constitutes abandonment of that dwelling as a homestead. The abandonment continues until the dwelling is physically occupied by the owner again.

Two things follow from that wording.

A whole-house lease is squarely in it. "All or substantially all" is not a gray area when you've handed over the keys and moved out.

The status doesn't come back when your tenant leaves. It comes back when you move back in. An empty house between leases is still not a homestead, which surprises owners who assumed the exemption was waiting for them.

The timing rule most articles get wrong

The same section has a sentence that a lot of writing about this either skips or misreads, so it's worth being careful.

Abandonment after January 1 of a year doesn't affect the homestead exemption for that particular year unless the property is rented for more than 30 days per calendar year for two consecutive years.

That is not a loophole, and it isn't a rule you get to apply to yourself. It's a test the property appraiser applies to your facts, and an ordinary twelve-month lease that starts partway through a year will cross both of those years without any difficulty.

What it does mean is that the exact year your exemption comes off is a real question with a real answer, and the person who has that answer works at your county property appraiser's office. Call and ask before you assume it either way.

You're expected to tell the county

Section 196.011(10)(a) says the owner of a property granted an exemption must notify the property appraiser promptly whenever the use of the property, or the owner's own status, changes so as to change the exempt status of the property.

Your exemption doesn't quietly switch itself off when a tenant moves in. In most counties it renews automatically year after year, which is convenient right up until the year you're no longer entitled to it. The duty to speak up is yours.

There's no form named in the statute and no deadline written into it. "Promptly" is the standard, and the county property appraiser's office will tell you how they want to hear it.

What waiting costs

Section 196.161 covers what happens if an exemption turns out to have been received by someone who wasn't entitled to it. The property becomes subject to the unpaid taxes, plus a penalty of 50 percent of those unpaid taxes for each year, plus 15 percent interest a year. That can reach back as far as 10 years.

Telling the property appraiser in your first month as a landlord avoids all of it. A short conversation now is a much cheaper version of the same conversation later.

The exemption usually isn't the big number

Owners who have held the same home for a long time usually lose more here than the exemption itself is worth.

Save Our Homes caps how much the assessed value of a homestead can rise each year at 3 percent. Over a decade or two, that cap does a lot of work: the assessed value the county taxes you on can drift far below what the house is actually worth.

Take the homestead off and the home gets reassessed. From then on it sits under a different cap: for residential property of nine or fewer units that isn't homestead, section 193.1554 limits the annual change in assessed value to 10 percent.

So the loss isn't really the exemption. It's the gap between assessed value and just value that Save Our Homes had been protecting, and on a long-held home that gap can be worth several times the exemption itself.

The practical move is simple. Ask the property appraiser what assessed value the house will carry next year, and get that number before you set the rent. It's an annual cost that comes out of your rent, and your tenant never sees it. How Much Rent Can I Get for My House in Tampa Bay? covers what sets the rent itself, and Should I Rent Out My House or Sell It? runs the whole decision with the new tax number in it.

Moving your Save Our Homes benefit to a new home

If you're renting the old house out because you're moving to another Florida home, the Save Our Homes benefit can come with you.

Under section 193.155, what transfers is the lesser of $500,000 or the difference between just value and assessed value on your previous homestead. The condition is a window rather than a deadline in the usual sense: you need to have had a homestead exemption as of January 1 in one of the three immediately preceding years.

So renting out the old place starts a clock rather than ending something. Find out how much time is on it before you decide how long to keep the house as a rental.

Our sales team at Gold Palm Homes covers filing for the exemption and how Save Our Homes works in more detail.

What to do in your first month

1. Call your county property appraiser and tell them the home is now rented.
2. Ask what assessed value it will carry next year, and what the tax bill becomes.
3. Put that number in your budget before you set a rent, not after.
4. If you're buying another Florida home, ask about portability in the same call.

The rest of the first-month list, from insurance to HOA rules to the lease itself, is in the accidental landlord's guide.