Court Opinion

ID: 9385229
Source: CourtListenerOpinion
Date Created: 2023-04-06 15:03:05.802986+00
Date Added: 2024-06-11T17:18:00.353546
License: Public Domain

Supreme Court of Florida
                            ____________

                         No. SC2020-1479
                           ____________

                     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,
                                  -2-
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.
                                 -3-
     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
                                -4-
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.

                                -5-
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.

                                -6-
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.
                                   -7-
     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
                                  -8-
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
                                 -9-
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.

                                 - 10 -
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
                                 - 11 -
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.

                                - 12 -
                                 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

                                - 13 -
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.”

                                 - 14 -
     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.”
                                 - 15 -
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.
                                - 16 -
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
                                - 17 -
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

                                 - 18 -
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

                               - 19 -