Joint Ownership: A Little-Known Strategy to Avoid Tax Hikes After Death

Surprise! You’re Inheriting More Than You Thought! When a loved one passes away, you’d hope that inheriting their property would be a straightforward process. But nope—Florida law has other plans. Suddenly, you’re not just dealing with grief; you’re staring down a lovely new real estate tax assessment that’s skyrocketing before your very eyes. Well, there’s a way to dodge that surprise bill—let’s talk about joint ownership and how it can save your heirs from this post-mortem financial nightmare.

30-Second Take-Away

• Adding an heir as joint tenant with right of survivorship (JTROS) or a tenancy-by-the-entirety co-owner can keep your Save-Our-Homes cap if the survivor also qualifies for homestead. Florida Statute § 193.155(8)(a). (Florida Legislature)
  
• The survivor must file Form DR-501 (homestead) and DR-501T (portability) by March 1 of the year after death. (Florida Dept. of Revenue)
  
• Risks include gift-tax paperwork, divorce liens, Medicaid look-back, and loss of control.
• A Lady Bird deed or revocable trust may be better alternatives depending on the circumstances.

 

Understanding The Tax Hike: What’s Behind It?

In Florida, when a homeowner passes away, their property often undergoes reassessment for tax purposes. This process can significantly increase property taxes for the new owner.

• Homestead Exemption: Long-time homeowners benefit from a cap on assessed value increases, limited to 3% annually. This means their property taxes remain relatively low over the years.
• Reassessment Upon Death: However, when the homeowner dies, and the property is transferred to an heir, it is reassessed at the current market value. This can lead to a steep tax increase that may catch families off guard, creating financial strain and unexpected challenges.

The Tax Time Bomb: Why Your Property Taxes Skyrocket Post-Death

Florida provides a significant advantage to homeowners through its 3% cap on property tax increases. If homeowners have lived in their homes for many years, they likely benefit from relatively low real estate taxes. However, when the property is transferred to a new owner, this cap resets, and property taxes can increase, sometimes substantially. This can present a challenge when passing the property to heirs.

When a property owned for decades is passed on to a loved one, the new owner may face an unexpected tax burden unless proper planning is in place. Strategies to mitigate this potential tax increase and ensure a smooth transfer are essential.

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2024 Statute Snapshot—Key Rules at a Glance

Topic	2024 Statute / Form	Key Rule
Save-Our-Homes (SOH) cap	§ 193.155(1)	Limits assessed-value jumps to 3 %/CPI
“Change of ownership” exceptions	§ 193.155(8)(a)	JTROS/TBE transfer to surviving owner = no reset
Portability window	§ 193.155(8)(k)	Survivor may port SOH benefit within 3 yrs
Homestead application	Form DR-501 (2024)	File by March 1 after death
Portability application	Form DR-501T (2024)	File within same 3-yr window

A Smart Strategy: Joint Ownership

No need to worry! There’s a practical and effective strategy that can help: Joint Ownership with Right of Survivorship. You can avoid property tax reassessment by adding an heir, such as your adult child, to the property deed as a joint tenant. When the time comes, the property will seamlessly pass to the surviving owner without triggering a tax increase. Let’s look at how this works and whether it’s the right choice for you.

Which Co-Ownership Forms Actually Work?

Ownership Form	Keeps SOH Cap?	Fine Print
JTROS (parent + child)	✔︎	Child must keep the home as primary residence. (Florida Legislature)
Tenancy-by-the-Entirety (spouses)	✔︎	Surviving spouse automatically retains cap.
Tenants-in-Common	✖︎ (mostly)	Only the deceased owner’s % keeps capped value.
Life Estate + Remainder (Lady Bird)	✔︎ (for life tenant, but not remainderman)	Cap resets when life tenant dies.

Shared Ownership: Important Considerations for Your Peace of Mind

While joint ownership can be a helpful tool, it’s essential to understand the responsibilities involved. Once you add someone to the deed, they share ownership with you while you live. This means they have legal rights to the property and may decide. It’s a significant commitment, so both parties must be on the same page.

Before proceeding, ensure mutual trust, clear communication, and understanding between co-owners. This approach works best when all parties have a shared long-term plan for the property.

Ticking the Right Boxes: Is Joint Ownership the Right Fit for You?

Joint ownership isn’t for everyone. Here’s how you know it might be the right move for your family:

• You’ve Got a Long-Term Plan: The person you’re adding to the deed, like an adult child, plans to live in the house for the long haul.
• You Trust Your Co-Owner: There is mutual understanding, and you’re confident that the person will not do anything you’re not on board with.
• You Want to Avoid a Tax Hit: You’re trying to keep property taxes low for your heir, and joint ownership helps prevent a sudden increase.

Filing Checklist for the Survivor

1. Record the deed with a JTROS or TBE designation.
   
2. DR-501 Homestead Application → county appraiser by March 1. (Florida Dept. of Revenue)
   
3. DR-501T Portability Application → within 3 years.
4. Check the August TRIM notice; appeal within 25 days if the cap was removed.

Risks & Caveats to Weigh

• Gift-Tax Paperwork – Equity over $19,000 (2025 limit) requires IRS Form 709.
  
• Creditor / Divorce Exposure – A co-owner’s liabilities can cloud title.
  
• Medicaid Look-Back – Adding a non-spouse counts as a gift for the 5-year rule.
• Litigation Example – Russell v. Hassett, 373 So. 3d 1242 (Fla. 3d DCA 2024) shows how a homestead misstep can lead to retroactive taxes. (Casetext)

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Thinking About Consulting a Lawyer? Absolutely

Look, adding someone to your property deed is a severe legal decision. It’s always wise to talk to a trusted estate planning attorney who can guide you. They’ll help you weigh the pros and cons, explain the potential tax savings, and ensure that the ownership transfer happens smoothly.

The attorney will also explore alternatives, like revocable living trusts, that may offer similar benefits without some of the risks tied to joint ownership.

If this strategy sounds like a good fit for your family, don’t wait until it’s too late to start planning. The earlier you think ahead, the better your chances of protecting your heirs from unnecessary taxes. After all, wouldn’t it be nice to pass down the family home without a hefty tax bill?

Remember: This blog provides a broad summary. For personalized legal guidance, it’s best to consult with a qualified estate planning attorney.

People Also Ask – Quick Answers

Does joint tenancy avoid property-tax reassessment in Florida?
Yes—when the survivor already had homestead and the deed is JTROS/TBE, § 193.155(8)(a) treats it as “no change of ownership.” (Florida Legislature)

What forms must the surviving owner file?
DR-501 (Homestead) and DR-501T (Portability) with the county appraiser by March 1 of the year after death. (Florida Dept. of Revenue)

Will adding my child trigger gift tax?
Possibly. Equity above the annual exclusion requires IRS Form 709, though tax is usually deferred under the lifetime exemption.

Can I lose the cap if my child moves out?
If the surviving owner doesn’t occupy the home as a primary residence, the Save-Our-Homes cap ends the next tax year.

What Can SJF Do To Help Your Family and Estate?

Are you unsure if an asset requires probate in Florida? At SJF Law Group, we make estate planning simple and stress-free. Our experienced Fort Lauderdale real estate lawyers work closely with you to ensure the security of your plans and family.

With our in-depth knowledge of estate planning, we manage everything efficiently, easing the burden on your loved ones. Whether you prefer in-person or virtual consultations, we proudly serve clients across Broward, Miami-Dade, and Palm Beach counties.

Take control of your future today! Contact SJF Law Group or call us at 954-580-3690 to schedule your consultation. Let us help you navigate the legal process with confidence and peace of mind.

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