Rejecting lower-court decisions, the Florida Supreme Court said a Sarasota man should not have received a homestead property-tax exemption for part of his house that he rented out.
The Supreme Court unanimously sided with Sarasota County Property Appraiser Bill Furst, who in 2014 investigated whether Rod Rebholz should have been receiving a homestead exemption on what was described as a single-family home.
Furst determined that 15 percent of the property was not entitled to a homestead exemption because it was being rented to a tenant. That resulted in Rebholz facing $7,000 in back taxes, penalties and interest for the tax years 2004 through 2013.
Rebholz, who lived in part of the house and initially applied for a homestead exemption in 1996, challenged the decision, touching off years of legal battling. A circuit judge and a panel of the 2nd District Court of Appeal ruled against the property appraiser, but the Supreme Court on Thursday said the property was not eligible for a full homestead exemption.
鈥淩ebholz and the district court would allow a property鈥檚 structure 鈥� and the labels used to describe the property 鈥� to dictate the application of the homestead tax exemption,鈥� Chief Justice Carlos Muniz wrote in a 19-page opinion. 鈥淭he result would be to 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 鈥榮ingle-family residence鈥� does not reflect the true design and use of Rebholz鈥檚 property. That property was effectively a boarding house, a part of which Rebholz lived in and used as his own residence.鈥�
Muniz wrote that Rebholz 鈥渓ived 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.鈥�
Furst鈥檚 determination that 15 percent of the property should not receive a homestead exemption was based on one tenant, John Michael Beaumont, who rented one of the upstairs rooms from 1996 through the tax years in the dispute, according to Thursday鈥檚 ruling.
鈥�(Consider) the part of the structure that Rebholz rented to Beaumont throughout the tax years at issue 鈥� the 15% that the property appraiser has designated as non-homestead property. Did Rebholz use that property as his residence? Surely not,鈥� Muniz wrote. 鈥淭he record leaves no doubt that Rebholz gave exclusive use of that portion to Beaumont, subject to Beaumont鈥檚 compliance with the terms of their rental agreement.鈥�
The panel of the 2nd District Court of Appeal said in its June 2020 ruling that the house should not be divided up for tax purposes 鈥� and pointed to potentially broader implications.
鈥淏ased upon our analysis of the Florida Constitution, statutes, and codes, we conclude 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,鈥� the panel decision said. 鈥淎ny interpretation to the contrary would circumvent public policy and could create financial hardship for countless Florida citizens who reside within their permanent residences while renting bedrooms or working from home to make ends meet.鈥�
But Muniz disputed that the Supreme Court opinion would affect people who work at home.
鈥淭he phrase 鈥榳orking from home鈥� speaks to activity occurring within property already found to be the owner鈥檚 residence,鈥� the opinion said. 鈥淭his 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鈥檚 property, reserving to himself only the access rights of a landlord. That portion of the property was not Rebholz鈥檚 residence.鈥�
A footnote in the opinion said Rebholz died in November 2015 and that the case continued with the trustee of a revocable trust as the plaintiff.
