Video Summary

What is a homestead exemption?  Under our Florida constitution, it provides that each property owner is entitled to exempt the first $25,000.00 of their home from taxes, provided that they are a Florida resident and applied for this exemption.  In addition to the first $25,000.00, there’s an additional $25,000.00 exemption for the assessed value between $50,000.00 and $75,000.00.  The difference between the first $25,000.00 and the second $25,000.00 is the school taxes are not included in the second $25,000.00.  So, if you apply for homestead exemption and the assessed value of your property is $75,000.00 or more, then you will save approximately $800.00.  In order to apply for a homestead exemption, you must own the home prior to the year which you apply for a homestead exemption and you must be a resident of the state of Florida and reside in the home; you need to be a permanent resident in the state of Florida. 

You cannot claim homestead exemption from anyone else or any other state or any other place, so you can’t have two homestead exemptions.  Your homestead exemption is provided for under the Florida constitution and you save about $800.00 a year in taxes with a homestead exemption.  In addition to homestead exemption, they have Save Our Homes Constitutional Amendment, which once you apply, it locks in your assessed valuation for that particular year, and the constitution provides that the assessed value will not increase by more than the cost of living index or three percent, whichever is less.  Lately, the values have been declining rather than increasing, but if we get back into a market whenever the values continue to increase, then, Save Our Homes can be a huge benefit to property owners. 

Also, I might suggest it if you’re selling your property here in Florida and either downsizing or moving – or increasing your homestead, you can transfer that.  It’s called portability, so be sure to tell your property appraiser when you apply for a homestead exemption on your new home that you’re transferring your homestead and ask them whether or not you can get any benefit by transferring your homestead exemption from one house to another.  If you have any questions about what is a homestead, you can give me a call at (727) 847-2288.

Video Summary

What is a ‘Ladybird deed?’  A ‘Ladybird deed’ is a conveyance by an owner of real property, wherein they convey the property usually to a relative or a friend and they reserve to themselves a life estate.  In addition to a life estate, they also reserve additional powers and rights to the property, such as the ability to sell or transfer the property during their lifetime and to retain all the proceeds.

The reason why most people execute these deeds is to avoid probate.  With this deed, if they have their accounts as ‘payable on death’, there’s no probate involved.  If they have a brokerage account as ‘transfer on death’, where they have their real estate and don’t want to lose the benefits of their homestead exemption if in joint names (because of certain ramifications).  They also aren’t disqualified for Medicaid with a Ladybird deed; your homestead is not counted if you happen to have Medicaid.

The deed was developed by an elder law lawyer who set it up for the very purpose to avoid probate (which we use quite often), and also not disqualify the parties from obtaining Medicaid (as it being a conveyance of a gift).  You can use it on any real property that you like.

Some people say, “How did it get the name ‘Ladybird?’”  Well, the author (or the person who came up with this and published it in his elder law manual) named various deeds after famous persons.  And this deed’s named after Ladybird Johnson, and so therefore, the name ‘Ladybird’.

So it’s a Ladybird deed which is your ability to transfer the property after you pass away to a loved one (or whoever you’d like, for that matter) but retain all the rights of ownership during your lifetime as to not have it disqualify you from Medicaid; and/or to retain all of your rights, as far as homestead exemption is concerned.  So it’s a nice estate-planning tool if you have a simple estate.

If you’d like to have a Ladybird deed prepared or discuss it, give me a call at (727) 847-2288.  Thank you.

Video Summary

“What is a life estate?”  Usually, it has to do with real property, or when the time period in which you own something is measured by a life.  So, therefore, it’s for an indefinite period of time.  We usually encounter life estates when you’re dealing with real property, particularly with a homestead.  (Under our Florida constitution, homestead means where you reside.)  If you die married, then a life estate passes to your spouse with the remainder interest passing to your children.

So, the life estate is measured by the life of the widow, and she gets to use the property during her lifetime.  And then, upon her death, the decedents’ children receive the remainder interest, and they’re called remainder men and she’s called a life tenant, and so that is whenever you usually encounter a life estate.  The homestead statute has recently changed and now the widow does have an election to take a half-interest instead of a life estate.  That is one of the areas where life estates are created– through our Florida constitutional homestead – when the decedent dies, survived by a spouse and children.

The other time that you see a lot of life-estate deeds is in estate planning or elder law planning.  When a person owns real property and they want to see that it passes to any particular individual, (as long as they’re not married) they can deed the property to an individual and reserve a life estate.  And that has been expanded upon by what we call Lady Bird Deeds or enhanced life-estate deeds, and this came about as a result of an elder law lawyer preparing these deeds so that they would not disqualify his clients from obtaining Medicaid.  So, if you have a regular life-estate deed, it’s a completed gift of you convey the remainder interest.

A Lady Bird Deed, however, says that not only does the life tenant reserve the right to use the property during their lifetime, they also reserve the right to sell the property, transfer the property to anyone they would like and they don’t have to account for the remainder men for any monies that they receive from the sale of it, or if they mortgage the property.  The origin of the word “Lady Bird” comes from the author naming the various deeds he had in his publication after famous persons.  The Lady Bird Deed is named after Lady Bird Johnson.  So, that dates how long it’s been around and the author of the Lady Bird Deed, or the enhanced life-estate deed.

So, a life estate is measured by the life of a particular person and is usually created by someone conveying property to their children and reserving a life estate, or through our constitutional homestead, where the surviving widow receives a life estate and then the balance or the remainder goes to the decedent’s children.  So, if you have any other questions or would like a Lady Bird Deed or to do some estate planning to avoid probate, give me a call at 727-847-2288.  Thank you.

Video Summary

What is a tax-deferred exchange?  A tax-deferred exchange is also called a 1031 tax-deferred exchange, and 1031 is a section of the Internal Revenue Service that identifies investment property. The exchange aspect of it is if you exchange one piece of property of equal or greater value than the value of the property that you have, you don’t have to recognize any gain.  You cannot accept any boot, and the amount of the liens or encumbrances on the property have to be equal or you have to have less equity in your property than the property that you’re acquiring as well as the purchase price being higher.

Now, the Internal Revenue Service has promulgated various regulations and rules as to how you can sell your property, and if you deposit the money with what they call an intermediary, you can then have a certain time period to select the property and you can select up to three properties and close on them within a six-month period.  There are also other provisions as far as you can select as many as ten properties, but there are specific rules that you must follow in order to take advantage of a tax-deferred exchange.

If you have any questions about handling a 1031 tax-deferred exchange, give me a call at 727-847-2288.  I’ll be happy to assist you.  Thank you.

Video Summary

I’ve received a question about what is involved in a tax deed sale from a recipient of our newsletter.  The tax deed sale starts back whenever they issue tax certificates and you purchase a tax certificate.  That is done on an auction type basis and it’s a reverse auction. So if you bid on a tax certificate for whatever the taxes are on a particular piece of property and no one bids against you, you get it at an interest rate of 18 percent.  If someone is bidding against you, well, they bid 17 percent and then you can bid 16 percent, all the way down to I guess 0 percent as far as bidding for the tax certificate.

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ce you acquire the tax certificate, you hold it until such time as the owner pays you in full for that, or after there have been two tax certificates or two years when the taxes have not been paid, then either one of the tax certificate holders can apply for a tax deed.  And when you make application for the tax deed, all back due taxes have to be paid.  Now sometimes you see a situation where no one really wants to step up and pay these back due taxes so you may have three or four years’ worth of back taxes before someone applies for a tax deed. Once you apply for a tax deed and you pay the back due taxes, the clerk then does a title search to determine who the owners of the property are and who the mortgage holders are, and then they give notice to the owner and anyone who has an interest in the property and tell them that the property is going to be auctioned off for the back due taxes.

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he taxes, once the auction takes place, are bid on a dollar amount and the bidding starts at the total amount of the back due taxes.  So if no one bids at the auction, then whoever has paid all these back due taxes on the tax certificate receives the property or certificate of title, whereas if there’s a third party bidder or someone else bidding, then the amount continues to go up and any amounts above what was owed on the back due taxes is paid out to the owner of the property as their interest.

The only time that the value comes into play as to the value of the property and how it might affect your bid is in the event it’s someone’s homestead property.  In that event, the statute provides that you have to bid a certain amount, a certain percentage, which I don’t have right off the top of my head to tell you what percentage of the assessed valuation is if you’re going to be purchasing someone’s homestead property for back due taxes.

The successful bidder under a tax sale will receive what they call a certificate of title. Once you receive the certificate of title, then you’re the owner of the property. However, if you want to sell the property or obtain a mortgage on the property, you’re not in a position to do so because you don’t have what they call marketable title and you may have to go through a suit to quiet title and be able to clear the title.  At Waller & Mitchell, we offer that service for a flat fee of $1,500.00 plus the cost, which would run somewhere between $500.00 and $1,000.00.  Another way of clearing the title is if you hold the title that you received from the clerk’s office from the tax sale for four years, you may be able to avoid having to go through the suit to quiet title, as far as that’s concerned.

So that’s how you go about a tax sale: you have to go through the process of obtaining a tax certificate and having at least two years of tax certificates issued before you’re able to apply for a tax deed and then there’s an auction that a third party can come in and big more than what the taxes are.  You don’t have the ability to force anyone to pay the taxes, so your money’s tied up until someone applies for a tax deed or the owner decides to pay the back due taxes.

If you have any more questions about the tax deed or you have one that you want the title cleared, give me a call at (727) 847-2288.  Thank you.