Before you read further, don’t let the above title worry you about the $25,000 homestead exemption for property tax purposes. That’s not the homestead exemption addressed in this article. The subject of this article is the constitutional homestead exemption established in Article X, Section 4, of the Florida Constitution that exempts homestead property from forced sale by creditors under certain circumstances. Specifically, Article X, Section 4, of the Florida Constitution provides:
“There shall be exempt from forced sale under process of any Court ... the following property owned by a natural person:
a homestead, if located outside a municipality, to the extent of one hundred sixty acres of contiguous land and improvements thereon ... or if located within a municipality, to the extent of one-half acre of contiguous land...”
In other words, your home is protected from creditors for up to a 160 acre parcel of land unless you live inside a municipality. Inside a municipality, only one-half acre of homestead property is protected from creditors under Florida Law. Crystal River and Inverness are the only municipalities in Citrus County. Therefore, in Citrus County you are entitled to the Florida Constitution’s homestead protection for up to a 160 acre parcel of land unless you live inside the city limits of either Crystal River or Inverness where one-half acre is protected. The value of your home in order to qualify for this exemption is unlimited. Florida is one of only a handful of states, including Kansas, Iowa, South Dakota, and Texas, that have unlimited homestead exemptions making Florida a so-called debtor’s haven.
However, once you have established a Florida residence on the proper acreage, you must also meet the constitutional requirement that the property is “owned by a natural person” to qualify for the homestead exemption. Therefore, the identity of the legal owner of the homestead can have dramatic impact on the availability of the constitutional homestead exemption.
In 2001, the Court decision of In re Bosonetto, 271 B.R. 403, interpreted the Florida Constitution’s language “owned by a natural person” and ruled that a homestead held within a revocable living trust was not entitled to the homestead exemption from forced sale for a personal residence. The Court reasoned that a revocable living trust was not a “natural person” so the homestead exemption did not apply.
This all may sound like a lot of legal mumbo-jumbo, so you may be asking what does this mean for me?
Simply, if it is your objective to protect your home from creditors and lawsuits, then the safest way to own your home is in an individual capacity or as tenants by the entirety for a husband and wife, and not through a trust, corporation, partnership, or other entity. Trusts and these other entities have their advantages but homestead protection is not one of them. If you own your home within a trust and you are sued resulting in a judgment against you, or you are forced somehow into bankruptcy, then you could lose your home to satisfy creditor claims.