Originally published on Forbes.com Sept 10th, 2014
Having the state involved in deciding what is or is not a family seems to be unavoidable, but it often tends to not end well, when you think through the implications.The decision by the Fourth Circuit of the Florida District Court of Appeal in the case of Robert Brklacic seems to have Mr. Brklacic being taxed on being happily married. Here is the story.
The issue was the Florida homestead exemption which is applied to the assessed value of real estate. The first and third $25,000 of value is exempted. So if you claim a $50,000 assessed property as your homestead, you pay on $25,000. If the property is assessed at $100,000, you would pay on $50,000. Based on a pretty unscientific scanning of millage rates, it appears to me that the exemption will tend to be worth a little over $1,000. There were no numbers in the decision.
Mr. Brklacic has owned a home in Broward County since 1979. He has always claimed the homestead exemption. That did not change in 2001 when he married the “love of his life”. Mr. Brklacic’s spouse is not named in the case, so in an excess of traditionalism I will refer to her as Mrs. B (this being Florida and 2001, we can count on the her). The Court indicated that according to Mr. B, they had a “congenial marriage”. Having a congenial marriage after a decade is no mean feat, so you might want to know what their formula is:
Appellant testified that he and his wife never lived together on a daily basis, but they stayed together on weekends and holidays when they traveled together or when Appellant stayed with his wife at her home in Palm Beach County. They have no children living in either residence. Appellant also maintained that he and his wife kept separate accounts and monies.
And there’s the rub. Mrs. B has been claiming the homestead exemption on her home in Palm Beach County. And thehomestead exemption is limited to one per “family unit”.
It turns out that it is possible for a married couple to be two family units.
A married woman and her husband may establish separate permanent residences without showing “impelling reasons” or “just ground” for doing so. If it is determined by the property appraiser that separate permanent residences and separate “family units”have been established by the husband and wife, and they are otherwise qualified, each may be granted homestead exemption from ad valorem taxation under Article VII, Section 6, 1968 State Constitution.
The Court determined that that rule only applied to couples, who while still legally married, were living apart, because they were estranged. That is not the situation of the Brklacics.
The foregoing law and persuasive authority favor finding that a married couple constitutes a single family unit when the marriage is intact, as opposed to the couple being separated or estranged. A single family unit would thus exist where spouses (even though living in separate primary residences or even separate permanent residences) live together at different periods of time, support each other in some financial or emotional way, and/or present themselves as a married couple (as opposed to estranged individuals who are just technically still married).
In a footnote, the Court noted the issues that this ruling raises.
Appellant never asserted that he and his wife were “estranged” or living separate lives 24/365. If he had done so, it would have placed the Property Appraiser and her staff in the position of determining whether the couple’s marriage was no longer intact—“your honor, Exhibit 33 is a photo of the Defendant and his wife holding hands.” On the flip side, an argument could be made that a couple with a very intact relationship who split their time between two residences may be able to claim two homestead exemptions so long as they are not legally married. One commenter has referred to this as the “’unwed’ loophole.” Although we need not meander down that thorny path in the instant case, the ambiguity and perhaps unforeseen consequences associated with the definition of the term “family unit” may merit legislative scrutiny in the near future. (Emphasis added)
An interesting question, that did not come up, is why it is that Palm Beach County takes the +/- $1,000 hit for the Brklacic homestead. Apparently the answer is that the Broward County collector is more on the ball. Palm Beach County is a bit better off than Broward, but not as much as I thought. The respective median household incomes are $51,603 and $52,806. Average value of a single family home is $199,900 in Broward and $216,200 in Palm Beach. I doubt that is what made the difference.
Then there is the fact, according to the case, that they vacation together and sometimes he stays at her place. I speculated with my covivant that, by implication, her not staying at his place might have been the secret to their marital bliss. CV thought I might have been onto something and then asked me why there was still mail on the kitchen counter, which would be really nicer if it were granite, but that’s just us.