In its last spring session the Florida Legislature revised a law for inter-spousal transfers of homestead property. Section 201.02, Florida Statutes imposes documentary stamp tax on most conveyances between spouses if there is an underlying mortgage. So, in Florida, when you get married and want to transfer property (add your spouse’s name to your home), a documentary stamp tax or “real estate transfer fee” is applied to the unpaid balance of the mortgage. The Florida documentary stamp tax rate is $0.70 per $100 paid for the property, in all counties except Miami-Dade.
For example, if the husband owned the property prior to the marriage, then added his wife once married, and there was a mortgage balance of $400,000.00, the Department of Revenue would collect documentary stamp tax on half of the mortgage balance. In this example the taxes would be around $2,800.00.
Previously, there was an exemption for the conveyance of the marital home when the parties divorced and the property was transferred. However, there was no such exception if you wanted to add your spouse once married. In 2018, the Florida Legislature amended the statute providing an exception for inter-spousal conveyance of homestead property if the conveyance was completed within one year of marriage. While this was a good change, it only applied to parties that were getting married in the future, and as long as they conveyed the property within one year of the marriage. Continue reading →
Recently an editorial published in USA Today on June 13, 2019 (read here: tinyurl.com/y36lvwjp) basically viewed reverse mortgages as simply predatory lending designed to steal seniors’ and the heirs’ homes without any benefit or knowledge. As a board-certified real estate attorney and Florida HUD Commissioner who has seen and dealt with many reverse mortgage foreclosures, I do not agree with this perspective for a number of reasons explained below.
First, the editorial fails to clearly discuss several important facts:
Without the loans, many seniors would have been forced to sell the homes anyway, due to the inability to pay maintenance costs (such as major structural repairs, and roofs), existing loans (which may be burdensome), or taxes and insurance;
No one forced these seniors to take the loans and spend the money they received, even if spent frivolously;
A majority of foreclosures occur not due to defaults relating to non-payment of taxes or insurance, but due to either abandonment of the home (residing in the home is a condition of getting and keeping the loan) or death;
Claiming that the heirs lost out on getting the home due to the reverse mortgage is a false premise, because it presupposes that the heirs deserve the home even though their parents needed and got to enjoy the benefits of the reverse mortgage money; and
Many foreclosures occur simply because reverse mortgages were granted before the crash, and the monies given were based on a higher pre-crash value. Combined with the accrued interest over 10 to 15 years (a key to how these work, seniors pay nothing during the term of the loan), and all the costs of sale (as high as 8% for real estate commissions, taxes, transfer taxes and title insurance), there is little to no equity left to interest the heirs or the estate to consider selling the properties.
One of the effects of the great mortgage foreclosure recession is the large increase in rental properties in communities that were once generally owner-occupied (i.e., primary residences or vacation homes).
As prices plummeted after the foreclosure, investor groups sprung up to buy the now-cheap properties and turn them into rental properties as a long-term investment. One such company is Invitation Homes, founded in 2012, that now owns 80,000 properties in seventeen markets, including a substantial number in South Florida. A Property Appraiser search for IH3-IH6 Property Florida, LP (subsidiaries of Invitation Homes) showed ownership of 1,138 homes in Palm Beach County alone almost all available for rent.
Picture this… You’re about to sell your house and retire to Florida. The documents are signed, movers are hired, and all you need to do now is confirm that the title company’s wire has hit your account. You receive a call from the closer that the funds have been wired. You check your account—no wire.
An hour goes by, then two, then twenty-four hours, then two days. When you ask the title company to confirm the wire instruction from “your” email, you discover to your horror that the wire instructions “you” sent were not from you, but from a hacker who got into your email, found out you were selling your house, and sent fake instructions to the title company.
This has happened before and will almost certainly happen again. But it doesn’t have to if you are diligent and careful.
Over 300,000 new people became Florida residents in 2017, continuing a growth trend that shows no signs of slowing. With the new tax act squeezing many residents of high tax states in the northeast, the trend of continued population growth in the sunshine state is only expected to rise in 2018. Many new residents purchase new homes or convert their previous vacation or second homes in Florida into their primary residence. If this purchase or conversion is completed by December 31, those new residents may be eligible to apply for a Florida Homestead Exemption the following year.
Florida has two types of homestead:
The first is set forth in the Florida Constitution under Article X, Section 4, which is an automatic provision to protect homeowners from claims of creditors or spouses who exclusively hold title, and to insure that a surviving spouse is not made homeless. This protection is automatic based upon purchasing a house, condominium or cooperative and making it your primary residence.
The second form of homestead is known as the Homestead Exemption, and it is also set forth in the Florida Constitution under Article VII, Section 6, which provides a financial exemption from real property taxation of up to $50,000 in home value. Additional exemptions are available for veterans over 65, low income senior citizens, surviving spouses of a veteran or first responder that died in the line of duty, and certain disabled persons.