Associations Can Help Tackle Homestead Fraud - But Should They?
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Florida has distinct and separate laws regarding “homestead” or a “homestead exemption”.
One set of laws are the laws that protect homestead property from forced sale and from having a judgment or other liability result in a lien against the property. This exemption is governed by Article 10, Section 4, of the Constitution of the State of Florida, which exempts a homestead from forced sale and provides that no judgment or execution shall be a lien thereon.
Another set of laws regarding homestead are the laws which reduce the taxable value of residential real property by up to $25,000 for qualified residents. Pursuant to Section 196.031, Florida Statutes, everyone who qualifies for the initial homestead tax exemption is also entitled to an additional exemption of up to $25,000 on the assessed valuation greater than $50,000 for all levies other than school district levies.
In 1992 Florida voters approved the "Save Our Homes" Amendment to the Florida Constitution. If a homestead property qualifies for "Save Our Homes" protection, the yearly assessed value will not increase by more than 3 percent of the prior year's assessment (or the percentage change in the Consumer Price Index, whichever is less). While there are exceptions to the increases in valuation for new construction or improvements to the property, this protection results in thousands of dollars in savings for many Florida homeowners.
In order to qualify for the homestead tax exemption and "Save Our Homes" protection, there must be an actual intent to live permanently in a place, coupled with actual use and occupancy. Ultimately, all that is required to claim a homestead is that the person intends to reside on the property and in good faith makes the same his permanent home. The property appraiser makes a factual determination whether the property qualifies as the applicant's "permanent residence" for homestead purposes.
Improper, or fraudulent, homestead filings cost counties millions of dollars. Lori Parrish, the Broward County Property Appraiser, created a Fraud Unit, staffed with a combination of career law enforcement officers and knowledgeable appraisers in 2005 when she first took office. According to the Broward County Property Appraiser's website, as of mid-2008, the Fraud Unit investigated nearly 15,000 cases, which resulted in over $19 million in back tax liens and penalties. It also added more than $3 billion dollars worth of property into the tax roll due to fraudulent and unlawful exemptions. Investigators discovered many fraudulent exemptions as a result of reports from associations indicating which properties (units or homes) were leased or rented. The Lee County Property Appraiser, Ken Wilkinson, supports a requirement for community associations to supply information regarding leased or rented units to the local property appraiser's office.
How do you feel? Should community leaders and managers have an obligation to rat out owners leasing their properties (while claiming homestead)?
