Principal Residence. In Florida, the Florida Homestead exemption for asset protection on a principal place of residence is a shield against virtually all non lien creditors (i.e., it does not apply to perfected security interests on it, such as a mortgage). It applies to single family homes, condos, and mobile homes (except if the mobile home is situated on a leased lot, which is then protected from creditors under FS 222.05). In Florida there is no limit to the value of the property that is covered by a Florida homestead exemption. (See Florida Statutes, FS 222.01 and Article X Section 4 of the Florida Constitution ). However, there may be limits placed on the Homestead Exemption by Federal Bankruptcy Law:

The Bankruptcy Abuse and Consumer Protection Act ("BACPA") limit on homestead exemptions: The exemption for a homestead was originally limited to $125,000 (or $250,000 for both husband and wife) if the property was acquired within the previous 1215 days (3.3 years). The cap is not applicable to any interest transferred from a debtor's previous principal residence (which was acquired prior to the beginning of such 1215-day period). But even the $125,000 exemption is not protected if the debtor has not been a Florida resident for two years. This change was designed to prevent people from moving from out of state to take advantage of Florida's homestead protection. Also, the $125,000 exemption cap was increased on April 1, 2007 to $136,875.00 [see 11 USC §522 p(1) ]. Subsequently, the subsection (p) exemption cap was increased annually, and in 2013 was adjusted to $155,675.  In February 2016, the subsection (q) exemption cap was adjusted to $160,375.

Note: Florida's homestead exemption is limited to one-half (1/2) acre within a municipality and 160 contiguous acres outside of a municipality.

The asset protection benefits of homestead should not be confused with the homestead tax exemption

The tax exemption and creditor exemption are similar, but different rules apply to each. For example, the homestead tax exemption requires that you occupy your home on January 1 and that you must file papers with the county tax assessor or property appraiser.  These tax rules are irrelevant for asset protection of the homestead.

Homestead Exemption In Bankruptcy

Homestead protection may not apply if the debtor files bankruptcy.  Under the BACPA bankruptcy law, as amended, homestead protection is available in bankruptcy up to $155,675 unless the debtor occupied his/her current Florida homestead property and previous Florida homestead properties for a continuous 40-month period. Joint bankruptcy debtors can protect $311,350 of a jointly-owned homestead. Also, a debtor’s transfer of cash into his/her homestead within 10 years of filing bankruptcy that is intended to defraud creditors may be challenged by the bankruptcy trustee if the transfer was intended to defraud creditors. The BACPA bankruptcy law has no effect on Florida’s unlimited homestead protection outside of bankruptcy.

Scope of the Debtor Protection

Florida's debtor protection homestead provision is one of the broadest in the United States.  The value of the property that can be protected is unlimited, so long as the property occupies no more than one-half acre (2,000 sq m) within a municipality, or 160 acres (650,000 sq meters) outside of a municipality. The provision is written into the Florida Constitution , Article X, section 4, so it cannot be removed without a constitutional amendment.

Because of the scope of the protection afforded, persons from other states with heavy debts or large court judgments against them have been known to purchase expensive estates in Florida, one example being O.J. Simpson . However, this strategy was somewhat impaired by the 2005 Bankruptcy Code amendments.

One event that can drastically affect the value of a homestead is municipal incorporation. If a 160-acre (650,000 sq meters) non-municipal homestead is on land that is later incorporated into a municipality, the homestead will be grandfathered in and remain protected for the owner and his/her heirs. However, for any future purchasers of all or part of the property, the protected land will drop to the one-half acre (2,000 sq m) allowed within a municipality.

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