Bill Furst, etc. v. Rod Rebholz, etc.

Supreme Court of Florida
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No. SC2020-1479
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BILL FURST, etc., et al.,
Petitioners,
vs.
ROD REBHOLZ, etc., et al.,
Respondents.
April 6, 2023
MUÑIZ, C.J.
This case is about the availability of the homestead tax
exemption to a property owner who lives in one part of a residential
structure but rents out another part for the exclusive use of a
tenant. See Furst v. Rebholz as Trustee of Rod Rebholz Revocable
Trust, 302 So. 3d 423 (Fla. 2d DCA 2020). We hold that the owner
is not entitled to a homestead tax exemption on the rented portion,
because that portion is not the owner’s residence.1
1. We have jurisdiction. See art. V, § 3(b)(3), Fla. Const.
I.
The Florida Constitution governs homestead property in
several distinct ways: protecting it from forced sale by creditors;
restricting its alienation and devise; exempting it from certain ad
valorem taxes; and imposing a 3% cap on annual assessment
increases (through the Save Our Homes amendment). Art. X, § 4,
Fla. Const.; art. VII, §§ 4(d)(1)a., 6(a), Fla. Const. This case involves
the homestead tax exemption and the Save Our Homes assessment
increase cap. Those provisions are intertwined, because the 3%
assessment increase cap applies only to property that is entitled to
a homestead tax exemption. Art. VII, § 4(d), Fla. Const.; Zingale v.
Powell, 885 So. 2d 277, 284-85 (Fla. 2004).
The homestead tax exemption is set out in article VII, section
6(a) of the state constitution. In relevant part, it says: “Every
person who has the legal or equitable title to real estate and
maintains thereon the permanent residence of the owner, or
another legally or naturally dependent upon the owner, shall be
exempt from taxation thereon, [up to specified amounts].” So there
are two components to the homestead tax exemption: ownership
and residency. Ownership is not contested in this case. Instead,
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the parties’ dispute turns on the residency requirement and its
application. The question is how to determine the scope of a
property owner’s residence for purposes of the homestead tax
exemption.
The property here is a two-story residential structure located
in Sarasota. In the decisions below, both the trial court and the
district court characterized the structure as a “single family” home.
For the tax years 2004 through 2013, county tax officials treated
the entire structure as homestead property, based on owner Rod
Rebholz’s initial homestead exemption application in 1996. Rebholz
owned the property and lived in a portion of the structure at all
relevant times. But it is undisputed that, for the entire time,
Rebholz rented a portion of the structure to at least one tenant.
Rebholz lived on the bottom floor, which consisted of a
kitchen, living area, and bathroom. The upper floor had a common
laundry area and four individual rooms, each with its own living
area and bathroom; some of the rooms had a kitchenette. Each
room was lockable from the outside. The front door entry to the
property had two doorbells, one for the bottom floor and the other
for the top.
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The record includes testimony from John Michael Beaumont,
a tenant who rented one of the upstairs rooms without interruption
from 1996 through the tax years at issue (2004 to 2013) and
beyond. Beaumont learned of the property by reading an
advertisement in the newspaper. A written rental agreement
between Rebholz and Beaumont refers to the rate for Beaumont’s
“unit.” In his testimony, Beaumont called his unit “my place, my
room, my apartment.” Beaumont referred to Rebholz as “my
landlord.” Beaumont also spoke of “other tenants” and estimated
that, since 1996, eight to ten such persons had intermittently lived
in other rooms upstairs.
In 2014, the Sarasota County property appraiser became
aware that Rebholz might have received homestead benefits to
which he was not entitled. An investigation revealed the
configuration of the property and the rental situation just
described. Eventually, the property appraiser revoked the
homestead exemption on the 15% of the property that corresponded
to Beaumont’s unit, leaving intact the homestead exemption on the
remaining 85% of the property. The property appraiser reasoned
that, although Rebholz owned the entire structure and resided in
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part of it, at least 15% of the property was not being used as
Rebholz’s residence. 2
When a property appraiser determines that a person has
improperly received a homestead tax exemption or Save Our Homes
benefit, Florida law requires the property appraiser to impose the
additional taxes that would have been due for up to the preceding
ten years, plus a penalty and interest. §§ 196.161(1)(b),
193.155(10), Fla. Stat., (2014).3 In Rebholz’s case, the revocation of
the homestead exemption as to 15% of the total property had the
effect of removing the Save Our Homes benefit from that limited
portion of Rebholz’s property. The property appraiser therefore
recalculated Rebholz’s taxes for tax years 2004 through 2013,
applying to the non-homestead portion a 10% annual assessment
increase cap (instead of the 3% Save Our Homes cap). The result
2. The underlying complaint in this case and the subsequent
court decisions did not address the 15% calculation or the
methodology behind it, but rather the authority of the property
appraiser to make this apportionment at all. Our decision is
similarly limited in scope.
3. In this opinion, we will cite the Florida Statutes as they
existed in 2014. Between 2003 and 2014, the statutory provisions
cited in this opinion were not changed in ways material to this case.
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was that Rebholz owed approximately $7,000 in back taxes,
penalties, and interest. He paid the tax lien but then sued the
property appraiser, the tax collector, and the state Department of
Revenue for a refund and a reinstatement of homestead status to
the entire property. 4
After a bench trial, the circuit court entered judgment in
Rebholz’s favor. The court concluded that the entire structure
should be considered Rebholz’s residence, and it held that “[m]erely
sharing the residence with a tenant does not create a classification
of property not exempted.” The court continued: “Florida law does
not authorize the Property Appraiser to deny a homeowner his
constitutional homestead exemption for a room rented within his
residence while he simultaneously maintains the property as his
permanent residence.”
On appeal, a divided panel of the Second District Court of
Appeal affirmed in relevant part. The district court echoed the trial
4. Rod Rebholz initiated this litigation but died on November
20, 2015. Donald Rebholz, as the successor trustee to the Rod
Rebholz Revocable Trust, was substituted as the plaintiff and is the
respondent in this case.
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court, holding that “the property appraisers of this state are not
authorized by law to carve up a homeowner’s permanent residence
in order to remove the protection provided by the constitutional
homestead exemption when that person rents a bedroom or any
other space within their home.” Furst, 302 So. 3d at 434. The
district court also held that Florida Administrative Code Rule 12D-
7.013(5) is an invalid exercise of delegated legislative authority. Id.
at 431. That rule says that “[p]roperty used as a residence and also
used by the owner as a place of business does not lose its
homestead character. The two uses should be separated with that
portion used as a residence being granted the exemption and the
remainder being taxed.”
Judge Atkinson dissented in relevant part. He reasoned that
Rebholz had apportioned his property into separate residences, and
that Rebholz’s own residence did not include the rented portion of
the home. Furst, 302 So. 3d at 434-35 (Atkinson, J., concurring in
result only in part and dissenting in part). Judge Atkinson
summarized his view this way: “One cannot simultaneously reside
in a residence and rent out that residence for another’s exclusive
use as a residence.” Id. at 434.
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In response to a petition from the property appraiser and the
Department of Revenue, we accepted jurisdiction to review the
district court’s decision, which expressly affects property appraisers
as a class of constitutional officers. See art. V, § 3(b)(3), Fla. Const.
II.
The petitioners argue that the district court erred at the
threshold by concluding that, for purposes of applying the
homestead tax exemption, the entire structure was Rebholz’s
residence. We agree with the petitioners.
The Legislature has implemented the constitutional homestead
tax exemption through section 196.031, Florida Statutes (2014),
which Rebholz has not challenged. Subsection (1)(a) says that,
when a property owner “in good faith” makes real property in this
state his or a dependent’s “permanent residence,” the homestead
tax exemption applies to “the residence and contiguous real
property.” § 196.031(1)(a), Fla. Stat. (2014). The Legislature has
defined the term “permanent residence” to mean “that place where a
person has his or her true, fixed, and permanent home and
principal establishment to which, whenever absent, he or she has
the intention of returning.” § 196.012(17), Fla. Stat. (2014). Our
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Court has observed that “most determinations regarding whether a
permanent residence is being maintained on Florida property will
involve some level of factual inquiry regarding the actual use of the
residential property in question.” Garcia v. Andonie, 101 So. 3d
339, 347 (Fla. 2012) (emphasis added).
A review of section 196.011, Florida Statutes (2014), confirms
that residency is a use-based requirement. Subsection (1)(a)
establishes an application requirement for tax exemptions that are
based on property’s “ownership and use.” Subsection (9)(a) then
shows that this category includes homestead exemptions.
Specifically, subsection (9)(a) requires an updated application or
notice “when the applicant for homestead exemption ceases to use
the property as his or her homestead.”
Now consider the part of the structure that Rebholz rented to
Beaumont throughout the tax years at issue—the 15% that the
property appraiser has designated as non-homestead property. Did
Rebholz use that property as his residence? Surely not. The record
leaves no doubt that Rebholz gave exclusive use of that portion to
Beaumont, subject to Beaumont’s compliance with the terms of
their rental agreement. Contrary to the district court’s
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characterization, the property appraiser did not “divide” or “carve
up” Rebholz’s residence; instead, the property appraiser applied the
statutory scheme to discern the scope of Rebholz’s residence in the
first instance. The disputed portion of the property was used as
Beaumont’s residence, not as Rebholz’s. Cf. Smith v. Guckenheimer,
27 So. 900, 914 (Fla. 1900) (“How, then, are the exempted residence
and business house to be recognized and distinguished? Only by
their actual use as such by the party asserting the exemption
thereof.”). 5
But the question remains: does Florida law allow the property
appraiser to recognize this apportionment of Rebholz’s property for
homestead tax exemption purposes? 6 The district court said that
the answer is no. That conclusion seemed driven by two things:
5. Before the adoption of our state’s 1968 constitution, the
homestead tax exemption for urban homesteads applied to the
owner’s “residence and business house.” Art. IX, § 1, Fla. Const.
(1868). The 1968 constitution removed homestead protection for
the owner’s “business house.”
6. We recognize that cases involving homestead property’s
protection from forced sale may involve considerations (e.g., the
physical divisibility of a given property) different from those present
in the tax exemption context. Readers of this decision must keep
that distinction in mind.
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first, the district court’s characterization of the property as a
“single-family residential home,” Furst, 302 So. 3d at 434 n.5; and
second, the district court’s belief that no provision of Florida law
explicitly authorized the apportionment. In the district court’s view,
the property appraiser was asking the court to “read into the
[governing] statute provisions that are not there.” Id. at 429. We
believe that the district court’s holding on this question is wrong.
The most explicit authority for the property appraiser to
apportion the property is found in section 196.031(4), Florida
Statutes (2014). That provision says that the homestead exemption
can apply to “the portion of property” that is classified and assessed
as owner-occupied residential property. The district court’s
decision does not discuss this section, even though the property
appraiser invoked it in the proceedings below.
More fundamentally, the property appraiser’s authority is
derived from his obligation to implement a constitutional and
statutory scheme that makes residency a use-based requirement.
Rebholz and the district court would allow a property’s structure—
and the labels used to describe the property—to dictate the
application of the homestead tax exemption. The result would be to
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make arbitrary distinctions between functionally similar
homeowners and properties, without any constitutional or statutory
basis for doing so.
In this case, for example, the label “single-family residence”
does not reflect the true design and use of Rebholz’s property. That
property was effectively a boarding house, a part of which Rebholz
lived in and used as his own residence. To limit the reach of its
decision, the district court purported to distinguish Rebholz’s
property from “a multifamily apartment building of individual
autonomous units.” Furst, 302 So. 3d at 434 n.5. But assuming
the property owner were to live in one of those apartment units, we
fail to see a meaningful difference between that hypothetical
property and Rebholz’s. Beaumont—Rebholz’s tenant—himself
called his living area an apartment. The point is not to quibble over
labels. Under the constitutional and statutory scheme, how an
owner uses a property—not its physical structure or what it is
called—dictates the availability of the homestead tax exemption.
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III.
We have considered Rebholz’s arguments in support of the
district court’s decision, and we find them unpersuasive.
The parties and the courts below wrestled with whether and
how section 196.012(13), Florida Statutes (2014), applies in this
case. That provision defines the term “real estate used and owned
as a homestead” for purposes of chapter 196. It says:
(13) “Real estate used and owned as a homestead” means
real property to the extent provided in s. 6(a), Art. VII of
the State Constitution, but less any portion thereof used
for commercial purposes . . . . Property rented for more
than 6 months is presumed to be used for commercial
purposes.
The trial court held that, to the extent the property appraiser had
applied this provision in Rebholz’s case, it was unconstitutional.
The district court reversed on that point, concluding that this
definitional provision does not apply to Rebholz at all and therefore
should not have been considered by the trial court. The district
court noted that chapter 196 uses the defined term only in
connection with 100% homestead exemptions for property owned
and used by disabled veterans and other disabled persons. Those
exemptions are codified in distinct provisions that are separate from
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the generic homestead provisions applicable to Rebholz. Furst, 302
So. 3d at 429-30; §§ 196.091, 196.101, Fla. Stat. (2014).
We agree with the district court that this case does not put
directly at issue section 196.012(13)’s definition of “real estate used
and owned as a homestead.” As the district court explained,
Chapter 196 uses that term only in provisions that have not been
applied to Rebholz. The trial court erred by taking up the
“constitutionality” of a defined term embedded in those provisions.
But in his arguments to our Court, Rebholz now attempts to
use section 196.012(13) to his advantage. He contrasts that
provision with section 192.001(8), Florida Statutes (2014), which
gives the following definition of the term “homestead”: “that
property described in s. 6(a), Art. VII of the State Constitution.”
Rebholz argues that reading sections 196.012(13) and 192.001(8)
together shows that homestead property can be used for
commercial purposes. Otherwise, says Rebholz, there would be no
need for section 196.012(13) explicitly to subtract “any portion
thereof used for commercial purposes” from “real property to the
extent provided in s. 6(a), Art. VII of the State Constitution.”
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It is true that, to the extent it is part of the overall statutory
scheme governing homestead tax exemptions, section 196.012(13)
could inform the meaning of the provisions that are directly
applicable to Rebholz. But we do not think that section
196.012(13) helps Rebholz here. Nothing in that provision
undermines our analysis showing that, under the constitution and
section 196.031(1)(a), the owner or a dependent must himself use
property as his residence for that property to qualify for the
homestead exemption. Rebholz has perhaps offered an
interpretation of section 196.012(13) suggesting that homestead
property could be used both as a residence and for commercial
purposes. (The common areas shared by Rebholz and his tenants
might be considered an example of such dual use.) We need not
decide if Rebholz is right about that, because the record leaves no
doubt that Rebholz did not use the disputed 15% of his property as
his residence at all.
Rebholz also seeks support from section 196.061, Florida
Statutes (2014). There, the Legislature says that a homestead is
deemed abandoned upon “[t]he rental of all or substantially all of a
dwelling previously claimed to be a homestead for tax purposes.”
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That provision goes on to say that the abandonment “continues
until the dwelling is physically occupied by the owner.” Rebholz
argues that, since it is undisputed that he did not rent out the
entire structure, the rental of a single room should not affect his
homestead exemption.
We think that section 196.061 has no bearing on this case.
The property appraiser does not claim that Rebholz “abandoned” or
was absent from his homestead. It is undisputed that Rebholz at
all relevant times resided in a portion of the property, and the
property appraiser has left intact the homestead exemption as to
that portion. Section 196.061 simply does not speak to the
circumstances here.
Finally, Rebholz invokes an aspect of section 196.031(4) that
we have not yet discussed. In full, that provision reads: “The
[homestead] exemption provided in this section applies only to those
parcels classified and assessed as owner-occupied residential
property or only to the portion of property so classified and
assessed.” Rebholz notes the undisputed fact that, throughout the
tax years at issue, the property appraiser classified and assessed
Rebholz’s property entirely as owner-occupied residential property.
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Rebholz says this means that he is entitled to a homestead
exemption on the entire structure. We disagree, for a couple of
reasons.
First, section 196.031(4) on its face establishes a necessary
condition for the availability of the homestead exemption, but the
statute does not say that the classification alone is sufficient. More
importantly, by requiring property appraisers to assess back taxes
and penalties upon discovering that property has improperly
received a homestead tax exemption or Save Our Homes benefit,
sections 196.161(1)(b) and 193.155(10) show that mistaken
classifications do not control and can be corrected. Rebholz’s
interpretation of section 196.031(4) would render those remedial
provisions ineffective.
IV.
We conclude with a word about the scope of our decision
today. Unlike the district court in its opinion below, we do not
equate Rebholz with the “countless Florida citizens” who are
“resid[ing] within their permanent residences” while “working from
home.” Furst, 302 So. 3d at 434. The phrase “working from home”
speaks to activity occurring within property already found to be the
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owner’s residence. This case is about defining the scope of the
residence in the first instance. Here, Rebholz gave a tenant
exclusive use of a portion of Rebholz’s property, reserving to himself
only the access rights of a landlord. That portion of the property
was not Rebholz’s residence.
We quash the decision of the Second District (including its
holding that Rule 12D-7.013(5) is invalid) to the extent it is
inconsistent with our decision here. And we remand the cause for
further proceedings consistent with this opinion.
It is so ordered.
CANADY, LABARGA, COURIEL, GROSSHANS, and FRANCIS, JJ.,
concur.
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION
AND, IF FILED, DETERMINED.
Application for Review of the Decision of the District Court of Appeal
Class of Constitutional Officers/Direct Conflict of Decisions
Second District – Case No. 2D18-3323
(Sarasota County)
Jason A. Lessinger, J. Geoffrey Pflugner, Anthony J. Manganiello,
and Patrick Seidensticker of Icard, Merrill, Cullis, Timm, Furen &
Ginsburg, P.A., Sarasota, Florida,
for Petitioner Bill Furst
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Ashley Moody, Attorney General, and Timothy E. Dennis, Chief
Assistant Attorney General, Tallahassee, Florida,
for Petitioner State of Florida, Department of Revenue
Sherri L. Johnson of Johnson Legal of Florida, P.L., Sarasota,
Florida,
for Respondent
John C. Dent, Jr. and Jennifer A. McClain of Dent & McClain,
Chartered, Sarasota, Florida,
for Amici Curiae Ayesha Solomon, as Property Appraiser of
Alachua County, Florida, and Scott P. Russell, as Property
Appraiser of Monroe County, Florida
Loren E. Levy and Sydney E. Rodkey of The Levy Law Firm,
Tallahassee, Florida,
for Amicus Curiae Property Appraisers’ Association of Florida,
Inc.
Geraldine Bonzon-Keenan, Miami-Dade County Attorney, Jorge
Martinez-Esteve and Daija Lifshitz, Assistant County Attorneys,
Miami, Florida,
for Amicus Curiae Pedro J. Garcia, as Property Appraiser for
Miami-Dade County, Florida
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