WFCN –
Florida is a popular tourist destination for several reasons, including its abundance of beaches and large cities. Hundreds of homeowners in northeast Florida are discovering the hidden cost of renting out their rooms during the summer months, even though they are taking pleasure of the beach lifestyle.
People like David Bradfield, who lives in and rents out portions of his three-story St. Augustine Beach property, are finding it to be too much.
At his property, Bradfield now pays close to $300,000 per year, according to STREAM ACTION NEWS JAX LIVE.
He has been generating additional income by renting out rooms in his property for quite some time. However, his property taxes have increased by about $1,817 since he began renting out his holiday home. According to the statistics he has, the value of his property has increased by almost $333,000 in the past 10 years.
Bradfield expressed her belief that she was being punished since she lived in her home more than anyone else.
According to Bradfield, he leases out rooms in his home as frequently as 180 days each year, typically for stays ranging from a few days to a week. In his garage, he has constructed an apartment for himself, and when he rents out rooms, it’s often the upper two stories of his house. However, the garage apartment is currently the sole portion of his property that qualifies for a homestead tax exemption due to his frequent rental of the upper two floors.
This means that Bradfield isn’t even legally considered to dwell in the main house according to the county.
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The accusation that Bradfield had not lived in the residence for the past 24 years, without any evidence to back it up, is “totally absurd,” he stated.
After one year as a homeowner, you may be eligible for a property tax exemption under Florida law. A “homestead tax exemption” is a component of it that reduces the amount of your home’s taxable value by $50,000. The state’s “Save Our Homes” program limits the annual increase in a homeowner’s taxable value to no more than 3%. State officials have justified the move by claiming it will eventually prevent people from being priced out of their houses.
Unfortunately, according to Florida law, you can lose your tax exemptions if you rent out “all or substantially all” of your home for 30 days each year for two consecutive years.
Concerning the implications for landowners such as Bradfield, who simply rent out a portion of their home rather than the entire thing, Action News Jax’s Finn Carlin contacted the Florida Department of Revenue:
Carlin Finn: Is it within the purview of Florida property appraisers to partially revoke homestead exemptions for homeowners, especially those who live in the home year-round but rent out portions for short-term holiday rentals?
The Florida Department of Revenue says yes. It has long been established by both the Florida legislature and the Florida courts that homesteads are to be utilized exclusively for residential purposes, and not for any kind of commercial enterprise. The exemption mentioned in this section is limited to parcels that are categorized and assessed as owner-occupied residential property or to the portion of property that is thus assessed, according to Section 196.031(4) of the Florida Statutes.
Recent court decisions in Florida have addressed property tax issues for homeowners who have rented out our rooms. The Florida Supreme Court upheld Bill Furst’s decision last year to deny Rod Rebholz, a homeowner who was renting out rooms in his home, some of his tax exemptions. Furst was the property appraiser for Sarasota County.
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It reversed a lower court ruling that had sided with Rebholz and held that state property appraisers couldn’t “carve up” someone’s residence to deduct taxes. This is an issue that we also raised with the IRS:
According to the Florida Department of Revenue, when the state’s highest court applies this to an earlier decision, the lower court’s ruling becomes null and void and cannot be used as a basis for future legal decisions.
Importantly, unlike the occasional part-of-the-home rentals seen in a normal holiday rental, the landowner in Furst v. Rebholz rented out rooms for multiple months consecutively. Also, instead of just letting someone remain in their room for a short while, the homeowner had effectively made the rooms available to the people staying there. According to the Department of Revenue, property appraisers still have the authority to reduce a taxpayer’s tax exemption in whole or in part.
Regarding the area homes that will not benefit from the tax cuts, we were informed by St. Johns County property appraiser Eddie Creamer:
Do not consider yourself to be inhabiting any part of your property if you choose to rent it out in whole or in part. Therefore, we deduct that area of land from the homestead exemption.
According to Joyce Morgan, a property appraiser in Duval County, she follows a similar procedure in Jacksonville.
Morgan explained that homeowners do indeed “lose that part of your homestead” when they rent out their primary residence or even just a portion of it. “Unless you intend to live on the entire property as a homestead, you cannot claim it as such.”
However, Bradfield specifically cited the fact that he lives in his rental property as the reason he should not be subject to increased taxes.
If I’ve never left my house, then you can’t claim I’ve abandoned it. So be it, Bradfield declared.
According to the property appraisers in Northeast Florida, if you have a problem with your property tax bill, you should contact their office or the value adjustment board in your county. The latter usually resolves such disputes.