Opinion
Case No. 2D18-3323
06-19-2020
Bill FURST, as Property Appraiser of Sarasota County, Florida; and Jim Zingale, as Executive Director of the State of Florida Department of Revenue, Appellants, v. Rod REBHOLZ, AS TRUSTEE OF the ROD REBHOLZ REVOCABLE TRUST; and Barbara Ford-Coates, as Tax Collector of Sarasota County, Florida, Appellees.
J. Geoffrey Pflugner, Jason A. Lessinger, Anthony J. Manganiello, III, and Mark C. Dungan of Icard, Merrill, Cullis, Timm, Furen & Ginsburg, P.A., for Appellant Bill Furst, Property Appraiser of Sarasota County, Florida. Ashley Moody, Attorney General, and Robert P. Elson, Senior Assistant Attorney General, Revenue Litigation Bureau, Tallahassee, for Appellant Jim Zingale, as Executive Director of the Florida Department of Revenue. No appearance for Appellee Barbara Ford-Coates, as Tax Collector for Sarasota County. Sherri L. Johnson of Johnson Legal of Florida, P.L., Sarasota, for Appellee Rob Rebholz. Loren E. Levy and Stuart W. Smith of The Levy Law Firm, Tallahassee, for Amicus Curiae, The Property Appraisers’ Association of Florida, Inc.
J. Geoffrey Pflugner, Jason A. Lessinger, Anthony J. Manganiello, III, and Mark C. Dungan of Icard, Merrill, Cullis, Timm, Furen & Ginsburg, P.A., for Appellant Bill Furst, Property Appraiser of Sarasota County, Florida.
Ashley Moody, Attorney General, and Robert P. Elson, Senior Assistant Attorney General, Revenue Litigation Bureau, Tallahassee, for Appellant Jim Zingale, as Executive Director of the Florida Department of Revenue.
No appearance for Appellee Barbara Ford-Coates, as Tax Collector for Sarasota County.
Sherri L. Johnson of Johnson Legal of Florida, P.L., Sarasota, for Appellee Rob Rebholz.
Loren E. Levy and Stuart W. Smith of The Levy Law Firm, Tallahassee, for Amicus Curiae, The Property Appraisers’ Association of Florida, Inc.
SLEET, Judge.
Bill Furst, Property Appraiser of Sarasota County, and Jim Zingale, Executive Director of the Florida Department of Revenue (Appellants), appeal the final judgment reinstating the homestead tax exemption set forth in the Florida Constitution on 100% of Rod Rebholz's residence for the years 2004 to 2011 and 2013, during which he rented two bedrooms in his home to tenants. The final judgment also required a refund to Rebholz of the amount of the tax lien imposed by Appellants for those same years and declared section 196.012(13), Florida Statutes (2004-2011, 2013) , unconstitutional as applied to Rebholz's single-family residential home. Because the Florida Legislature has not authorized the removal of the constitutional homestead exemption from a portion of a homeowner's permanent residence for renting space within the home to residential tenants, we affirm the portion of the final judgment retroactively reinstating Rebholz's homestead exemption on 100% of his residence and awarding him a refund for taxes improperly paid. However, because section 196.012(13) is not applicable in this case, the trial court erred in addressing the constitutionality of the statute, and we must reverse that portion of the final judgment.
The notice of appeal in this case was filed by Mr. Furst. Mr. Zingale subsequently filed a notice of joinder and adopted the briefs filed on behalf of Mr. Furst. Barbara Ford-Coates, Tax Collector of Sarasota County, participated in the proceedings below as a named defendant. Although she makes no appearance in the instant appeal, she is listed as an appellee pursuant to Florida Rule of Appellate Procedure 9.020(g)(2).
The language of subsection (13) of the statute did not change at any time material to the facts of this appeal.
I. FACTS
The facts of this case were undisputed below. At all times at issue, Rebholz was the sole owner of his home and used it as his permanent residence. The first floor of the two-story home consisted of Rebholz's master bedroom, a living room, and a kitchen, and the second floor was comprised of a laundry room and four bedrooms, each with a lockable door and an internal bathroom. In 1996, pursuant to article VII, section 6(a), of the Florida Constitution, Rebholz applied for and received a homestead exemption on 100% of his residence, and he continued to receive the full exemption through the 2014 tax year. During that time, the property appraiser continuously classified the home as an owner-occupied residential property.
In late 2014, the property appraiser received a complaint about Rebholz and discovered that he was renting one of his upstairs bedrooms to a tenant who had been renting the room since March 1996 and that another upstairs bedroom had been rented sporadically during that same period. On September 24, 2014, the property appraiser sent a letter to Rebholz advising him that he may have improperly received the 100% homestead exemption from 2004 through 2013. Citing section 196.012(13), the property appraiser asserted that Rebholz's rental of the two bedrooms was a commercial use which rendered fifteen percent of his residence ineligible for the homestead tax exemption.
Thereafter, the property appraiser divided Rebholz's home for taxing purposes into eighty-five percent homestead property and fifteen percent commercial-use property. The property appraiser retroactively removed the homestead exemption on the fifteen percent it deemed commercial use. On November 6, 2014, the property appraiser recorded a tax lien against Rebholz's residence in the amount of $7023.87 to recover taxes it claimed Rebholz should have paid on fifteen percent of his residence for the years 2004 through 2011 and 2013.
Neither the record nor the parties’ briefs and arguments address the absence of a tax for year 2012.
Rebholz satisfied the lien in order to stop the accrual of interest, but he subsequently filed suit, seeking a refund of the retroactive taxes he paid. Rebholz's two-count amended complaint alleged unlawful tax lien and sought a declaratory judgment finding section 196.012(13) unconstitutional.
On July 30, 2018, the parties proceeded to nonjury trial at which Appellants admitted the deposition testimony of two of Rebholz's tenants. Tenant Michael Beaumont testified that he had lived in one of the upstairs bedrooms since 1996 and paid rent of $400 a month. When he first moved in, he signed a twelve-month lease, but after the first year, he continued to live there without a written lease. Rebholz frequently traveled for months at a time and gave Beaumont "a break on the rent" in exchange for Beaumont's paying the bills, mowing the lawn, and generally watching the home. Beaumont recalled only eight or nine other tenants who rented Rebholz's other bedrooms for a few months at a time during the years 1996 to 2014. According to Beaumont, the tenants shared a common kitchen, laundry room, and mailbox; regularly socialized with Rebholz in the main living area; and used the downstairs front door to enter the house and access their upstairs bedrooms. He further testified that both he and Rebholz had a key to the lock on his bedroom door.
Tenant Karl Krause testified that he lived in one of Rebholz's upstairs bedrooms on two occasions—for six to eight months in 2011 and for about six months in 2014. According to Krause, Rebholz's relatives would visit often and stay in the other upstairs bedrooms. Krause paid rent of $500 a month. On both occasions that he lived with Rebholz, Krause signed a written lease, but no minimum stay was required. He also testified that Rebholz retained a key to his bedroom door. Krause moved out in 2014.
Sarasota County Deputy Property Appraiser Kathleen Reardon testified at the hearing that she was the member of the property appraiser's office who made the ultimate determinations that fifteen percent of Rebholz's home was being used for a commercial purpose and that the homestead tax exemption had to be retroactively removed from that portion of the residence. Reardon never visited Rebholz's home but based her decision in part on information gathered by a department appraiser who made physical inspections of the property. Based on the information she received from the appraiser, Reardon initially determined that possibly seventy to seventy-five percent of the residence could be nonexempt due to commercial use. She then spoke to Rebholz on the phone and later met with him and his attorney. Rebholz told her that most of the upstairs of his home was used for storage except for one bedroom that was used by his son when he visited and the other bedroom that had been rented by a tenant for years. After receiving this information, Reardon concluded that only fifteen percent of Rebholz's home was used for a commercial purpose. At no time did she offer a formula or other procedure by which the commercial-use percentage of the home was determined. But Reardon did confirm that Rebholz's residence had continuously been classified as owner-occupied residential property since 1996.
The trial court entered final judgment in favor of Rebholz, concluding that "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." With regard to Rebholz's constitutional challenge of section 196.012(13), the court concluded that the section was unconstitutional as applied because it "exceed[s] the authority of the [l]egislature [by] impos[ing] an additional substantive restriction [on] the constitutional right to a homestead exemption." This appeal ensued.
II. ANALYSIS
On appeal, Appellants argue that the trial court erred in entering final judgment in favor of Rebholz. Appellants maintain that chapter 196 authorizes the division of property—including a person's permanent residence—for taxation purposes based on the ownership and actual use of the property. Appellants argue that by renting bedrooms with lockable doors, Rebholz completely surrendered his right to occupy and possess that part of his residence and thus transformed it into a place of business. Appellants further argue that Rebholz's use of that portion of his home for commercial purposes allowed the property appraiser to divide Rebholz's home into exempted homestead property and commercial-use property, retroactively remove the tax exemption from the commercial-use portion, and require Rebholz to pay back taxes. We disagree. The Florida Constitution and Florida law do not authorize such a division of a homeowner's permanent residence with respect to ad valorem taxation and the homestead exemption.
Florida's homestead tax exemption originates from article VII, section 6(a), of the Florida Constitution, which provides that "[e]very 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 ...." (Emphasis added.) This provision is codified in chapter 196, Laws of Florida. See § 196.031(1)(a) ("A person who ... has the legal title or beneficial title in equity to real property in this state and who in good faith makes the property his or her permanent residence or the permanent residence of another or others legally or naturally dependent upon him or her, is entitled to an exemption from all taxation ... up to the assessed valuation of $25,000 on the residence and contiguous real property ...." (emphasis added)). And article VII, section 6, authorizes the legislature "to ‘prescribe appropriate and reasonable laws regulating the manner of establishing the right to [the] exemption.’ " Garcia v. Andonie, 101 So. 3d 339, 345 (Fla. 2012) (alteration in original) (quoting Sparkman v. State, 58 So. 2d 431, 432 (Fla. 1952) ).
We review de novo the trial court's interpretation of the constitutional and statutory provisions. See Fla. Hosp. Waterman, Inc. v. Buster, 984 So. 2d 478, 485 (Fla. 2008).
When reviewing constitutional provisions, ... this [c]ourt must examine the actual language used in the constitution. Crist [v. Fla. Ass'n of Crim. Def. Lawyers ], 978 So. 2d [134,] 140 [ (Fla. 2008) ] ; [ Fla. Dep't of Revenue v.] City of Gainesville, 918 So. 2d [250,] 256 [ (Fla. 2005) ]. "If that language is clear, unambiguous, and addresses the matter in issue, then it must be enforced as written." Fla. Soc'y of Ophthalmology v. Fla. Optometric Ass'n, 489 So. 2d 1118, 1119 (Fla. 1986). The words of the constitution "are to be interpreted in their most usual and obvious meaning, unless the text suggests that they have been used in a technical sense." Wilson v. Crews, 160 Fla. 169, 34 So. 2d 114, 118 (1948) (quoting City of Jacksonville v. Glidden Co., 124 Fla. 690, 169 So. 216, 217 (1936) ). Additionally, this [c]ourt "endeavors to construe a constitutional provision consistent with the intent of the framers and the voters." Zingale [v. Powell], 885 So. 2d [277,] 282 [ (Fla. 2004) ] (quoting Caribbean Conservation Corp. v. Fla. Fish & Wildlife Conservation Comm'n, 838 So. 2d 492, 501 (Fla. 2003) ). Constitutional provisions "must never be construed in such manner as to make it possible for the will of the people to be frustrated or denied." Id. (quoting Caribbean Conservation, 838 So. 2d at 501 ).
Lewis v. Leon County, 73 So. 3d 151, 153-54 (Fla. 2011) ; see also Pleus v. Crist, 14 So. 3d 941, 944-45 (Fla. 2d DCA 2009) ("The fundamental object to be sought in construing a constitutional provision is to ascertain the intent of the framers and the provision must be construed or interpreted in such manner as to fulfill the intent of the people, never to defeat it. Such a provision must never be construed in such manner as to make it possible for the will of the people to be frustrated or denied." (quoting Ford v. Browning, 992 So. 2d 132, 136 (Fla. 2008) )).
And "[i]n construing a statute we are to give effect to the [l]egislature's intent. In attempting to discern legislative intent, we first look to the actual language used in the statute." Daniels v. Fla. Dep't of Health, 898 So. 2d 61, 64 (Fla. 2005) (citation omitted); see also Fla. Virtual Sch. v. K12, Inc., 148 So. 3d 97, 101 (Fla. 2014) ("[L]egislative intent is the polestar that guides a statutory construction analysis."). "When the statute is clear and unambiguous, courts will not look behind the statute's plain language for legislative intent or resort to rules of statutory construction to ascertain intent." Daniels, 898 So. 2d at 64. We simply cannot—and will not—read into the statute provisions that are not there. See Eastwood Shores Prop. Owners Ass'n v. Dep't of Econ. Opportunity, 264 So. 3d 264, 268-69 (Fla. 2d DCA 2019) ("The courts are not at liberty to add language to statutes." (citing Gordon v. Fishman, 253 So. 3d 1218, 1221 (Fla. 2d DCA 2018) )).
The constitutional and statutory language at issue here is clear. To qualify for a Florida homestead tax exemption, a taxpayer must have legal or equitable title to the property and maintain it as their permanent residence or that of a dependent. Art. VII, § 6(a), Fla. Const.; see also § 196.031(1)(a). It is undisputed that Rebholz satisfied those requirements as he owned his home and used it as his permanent residence. See § 196.012(17) (defining "permanent residence" as "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"). As such, Rebholz met his burden of proving that he is entitled to Florida's homestead tax exemption. See Wells v. Haldeos, 48 So. 3d 85, 88 (Fla. 2d DCA 2010) ("[T]he person claiming the homestead exemption has the burden of proving that he or she qualifies for such.").
Appellants nevertheless contend that the property appraiser has the authority to divide Rebholz's single-family permanent residence into a residential portion entitled to the homestead tax exemption and a commercial-use portion not entitled to the homestead tax exemption. Because Appellants cannot point to any legal authority granting the property appraiser such power, we must disagree.
First, we find no merit to Appellants’ argument that section 196.012(13) grants the property appraiser this authority. Section 196.012(13) provides as follows:
"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, with the title of such property being recorded in the official records of the county in which the property is located. Property rented for more than 6 months is presumed to be used for commercial purposes.
(Emphasis added.)
Section 196.012 is the definitional statute for chapter 196, and the terms listed are defined "[f]or the purpose of this chapter." The statute does not define the terms "real property" or "commercial use." And the term defined in subsection (13)—"real estate used and owned as a homestead"—is only used two other times in the chapter: in section 196.101, which exempts from taxation "real estate used and owned as a homestead" by permanently disabled persons, and section 196.091, which exempts "real estate used and owned as a homestead" by disabled veterans. But neither of those sections discuss the division of a homeowner's permanent residence into exempt homestead and nonexempt commercial-use portions, and even if they did, neither apply to Rebholz, who is neither a permanently disabled person nor a disabled veteran. Because this statute does not apply to Rebholz, it was error for the trial court to find it unconstitutional as applied. We therefore reverse that portion of the trial court's final order.
Appellants, however, maintain that when section 196.012(13) is read in conjunction with certain other sections of chapter 196, the property appraiser has the authority to divide any property—even a homeowner's permanent residence—into exempt homestead and nonexempt commercial-use portions. See §§ 196.011 ("Annual application required for exemption. ... Every person or organization who ... has the legal title to real or personal property, except inventory, which is entitled by law to exemption from taxation as a result of its ownership and use shall ... each year, file an application for exemption with the county property appraiser."); .031(1) (addressing situations where the homestead exemption is claimed on a single property by more than one owner and providing that title to homestead property "may be held by the entireties, jointly, or in common with others" and that "the exemption may be apportioned among such of the owners as reside thereon"); .193(1) ("Exemption applications; review by property appraiser. ... [N]o ... property shall be exempt which is rented or hired out for other than religious, educational, or other exempt purposes at any time."); .193(3)(a)-(c) (authorizing the property appraiser to determine "[w]hether the [tax exemption] applicant falls within the definition of any one or several of the exempt classifications," "[w]hether the applicant requesting exemption uses the property predominantly or exclusively for exempt purposes," and to what extent "the property is used for exempt purposes").
These sections, however, do not exclusively address homestead tax exemptions but rather address all the exemptions listed in chapter 196. None of the sections are applicable to the issue currently before this court, and the mere reference to "use" in these sections does not change our conclusion that chapter 196 does not authorize the carving up of a homeowner's permanent residence for the purpose of denying the homeowner the constitutional homestead tax exemption on part of that residence.
Appellants also rely on Florida Administrative Code Rule 12D-7.013(5) in support of their argument. Rule 12D-7.013 is entitled "Homestead Exemptions—Abandonment," and subsection (5) provides 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." It is true that section 195.027(1), Florida Statutes, authorizes the Department of Revenue to prescribe rules and regulations for the assessment of property and provides that the property appraiser must follow the rules implemented by the Department. However, pursuant to the statute, "the legislative intent [is] that the department shall formulate such rules and regulations that property will be assessed, taxes will be collected, and the administration will be uniform, just, and otherwise in compliance with the requirements of the general law and the constitution." § 195.027(1) (emphasis added). "It is axiomatic that an administrative rule cannot enlarge, modify or contravene the provisions of a statute." Phillips v. Leon Cty. Pub. Works, 277 So. 3d 1076, 1079 (Fla. 1st DCA 2019) (quoting Campus Commc'ns, Inc. v. Dep't of Revenue, 473 So. 2d 1290, 1291 n.1 (Fla. 1985) ). As such, when an administrative rule conflicts with a statute on the same subject, the statute controls. Id. at 1080.
Nothing in chapter 196 even references—let alone authorizes the property appraiser to effectuate—the division of a homeowners’ permanent residence for ad valorem taxation purposes. Accordingly, rule 12D-7.013's attempt to do just that is "an invalid exercise of delegated legislative authority," see Campus Commc'ns, 473 So. 2d at 1291 n.1, and does nothing to change our conclusion that the rental of bedrooms and common spaces in a single-family permanent residence does not create "a place of business"—a term not defined by rule 12D—that can be severed from the residential portion of the home. This is especially so where, as here, the homeowner and the tenants share much of the house as common area, including the kitchen, living room, entryway, and laundry room.
Finally, Appellants point to the Fourth District's opinion in Karayiannakis v. Nikolits, 23 So. 3d 844 (Fla. 4th DCA 2009), as support for their position. However, Karayiannakis is distinguishable from the instant case. Karayiannakis owned and operated the Picadilly Apartments, a two-story apartment building that contained five individual apartment units and was classified as a multifamily structure. She lived in one unit and rented the other four. She requested that the Palm Beach County Property Appraiser declare the entire apartment building and surrounding land as her homestead for taxation and exemption purposes. The property appraiser, however, determined that the one apartment unit that she maintained as her permanent residence represented just thirty-seven percent of the entire property and exempted only that thirty-seven percent as homestead. Karayiannakis filed suit, and the trial court granted summary judgment in favor of the property appraiser. On appeal, Karayiannakis conceded that the multifamily apartment building comprised of several fully equipped individual apartment units could be divided, with her one unit being exempt homestead property and the other units being nonexempt commercial-use property. But she argued that she was entitled to a homestead exemption for the adjoining land, relying on section 193.031(1)(a), which states that Florida's homestead exemption applies to a taxpayer's "residence and contiguous real property." Karayiannakis, 23 So. 3d at 845-46.
Although the Fourth District's opinion inexplicably relies on section 196.012(13)'s definition of "real property used and owned as a homestead" and focuses on the exclusion of "any portion ... used for commercial purposes," the court was never asked to determine the division of a homeowner's personal residence for tax exemption purposes. The only issue before the Fourth District in Karayiannakis was whether the real property surrounding the apartment building was contiguous to Karayiannakis’ residence or part of the commercial purpose of running an apartment building. Karayiannakis herself conceded that the commercial portion of the apartment building could be severed from her own unit for taxation purposes, but her one unit—where she maintained her permanent residence—was never itself divided. Karayiannakis applied for and was granted the constitutional homestead tax exemption on the entirety of her permanent residence. As such, Appellants are incorrect in arguing that the Karayiannakis opinion stands for the proposition that a homeowner's permanent residence may be divided into exempt homestead and nonexempt commercial-use property.
It is significant to point out that the only reference to home rental in chapter 196 appears in section 196.061, wherein the legislature specifically addresses the rental of "dwelling[s]"—as opposed to "real estate" or "real property" as referenced in section 196.012(13). The Florida Legislature first enacted section 196.061, entitled "Rental of homestead to constitute abandonment," in 1996, and subsection (1) of that version of the statute provided as follows: "The rental of an entire dwelling previously claimed to be a homestead for tax purposes shall constitute the abandonment of said dwelling as a homestead, and said abandonment shall continue until such dwelling is physically occupied by the owner thereof." (Emphasis added.) In 2013, the legislature amended section 196.061 to change the phrase "an entire dwelling" to "all or substantially all of a dwelling." (Emphasis added.)
Because the span of years at issue in the instant appeal includes years both before and after the statute was amended, both versions of the statute are germane to our discussion.
We recognize that based on the language emphasized above, this statute is not applicable to the instant case where there has been no allegation that Rebholz has rented all or substantially all of his residence. The statute is nevertheless noteworthy. First, it illustrates that the legislature has contemplated the effect that the rental of a dwelling has on the eligibility to claim the homestead exemption and has chosen to only effectuate a loss of the exemption if all or substantially all of the property is rented. One can reasonably infer that this is because a homeowner who rents all or substantially all of a dwelling is not maintaining that dwelling as their permanent residence as defined by section 196.012(17). Nowhere in section 196.061—or anywhere else in chapter 196—does the legislature address what effect the rental of less than substantially all of a person's dwelling—like the fifteen percent of Rebholz's residence at issue here—has on a previously claimed homestead exemption.
Second, section 196.061 does not authorize the division of the dwelling into exempt homestead and nonexempt commercial-use property. Instead, the legislature takes an "all or nothing" approach: if a substantial portion of the dwelling is rented, the dwelling cannot be deemed homestead and the entire exemption is lost. It is simply inescapable: nowhere in chapter 196 does the legislature authorize property appraisers to divide a person's permanent residence for the purpose of denying homeowners the constitutional homestead protection and instead levy a tax against them. And we cannot read such a provision into the statutes.
A similar conclusion has been reached in bankruptcy case law addressing the apportionment of homestead property for the purposes of a forced sale to satisfy a creditor's debt pursuant to article X, section 4(a)(1), of the Florida Constitution. In such cases, courts have expressed a "firm ... belief that a debtor [homeowner] does not necessarily abandon his or her homestead simply because he or she may rent or lease portions thereof." In re Makarewicz, 130 B.R. 620, 621 (Bankr. S.D. Fla. 1991). The court in Makarewicz expressed an "intention not to deny the homestead exemption merely by virtue of commercial activity taking place on the debtor's living space" but instead to determine "whether a unit or parcel is susceptible to division by perpendicular and/or horizontal lines" and "whether such unit or parcel is lawfully conveyable as an independent parcel under existing law." Id.; see also In re Callejo, No. 14-25597-BKC, 2015 WL 779002, *3 (Bankr. S.D. Fla. 2015) ("In the century which has passed since the enactment of Florida's first homestead exemption clause, in 1885, not a single reported case has declared a residential unit occupied by the owner as his family home to be non-exempt [sic] simply because the owner conducted business activities within those premises. ... Art[icle] X, [section] 4 limits the homestead exemption to ‘the residence of the owner or his family'; it does not limit what the owner or his family can do within the four walls of that residence. Indeed, to do so would place homeowners in this state who operate businesses out of their homes, for reasons of economy or industry custom, at an enormous disadvantage relative to their counterparts who commute to their jobs." (some emphasis omitted) (quoting Edward Leasing Corp. v. Uhlig, 652 F. Supp. 1409, 1416-17 (S.D. Fla. 1987) )); In re Bornstein, 335 B.R. 462, 464 (Bankr. M.D. Fla. 2005) ("Florida homestead laws ... do not contemplate dividing up exempt property.").
If the geometric analysis employed by the bankruptcy courts is applied to the space Rebholz rented out in his home, the actual bedrooms may be outlined by specific perpendicular and horizontal lines, but the same cannot be said for the common spaces that the tenants shared with Rebholz and one another; furthermore, none of the space used by the tenants could lawfully be conveyed as an independent parcel. This analysis demonstrates the unique indivisible nature of a person's private permanent residence. Cf. First Leasing & Funding of Fla., Inc. v. Fiedler, 591 So. 2d 1152, 1153 (Fla. 2d DCA 1992) (holding that debtor was "entitled to an exemption from forced sale of her residence only and not the two units [of the debtor's triplex apartment building] leased to and occupied by tenants" but recognizing that "if the portion of property used for business could not be easily severed from the owner's home, the courts have been more willing to extend homestead status to the entire parcel"); Bornstein, 335 B.R. at 465 (affirming the apportionment for forced sale purposes of a debtor's duplex where half was the debtor's residence and half was rented to a third party but noting that cases relied on by the debtor that involved single-family residences "are distinguishable on that basis alone"); In re Ballato, 318 B.R. 205, 210 (Bankr. M.D. Fla. 2004) (addressing apportionment under article X, section 4(a), where "it is undisputed that the [p]roperty is a single-family residence[ ] and that there are no severable portions of the [p]roperty being used for income-producing purposes" and concluding that "[e]ven assuming ... that unrelated persons were living [there], and further assuming that those persons were paying rent for the use and occupancy of portions of the [p]roperty, the fact that the [p]roperty is a single-family residence distinguishes it from the cases" apportioning multiunit properties).
We are cognizant that "the homestead provisions found in article VII and article X ... are separate and distinct" and that "the ‘principles relating to one do not necessarily govern the other.’ " Baldwin v. Henriquez, 279 So. 3d 328, 332 n.3 (Fla. 2d DCA 2019) (quoting Crain v. Putnam, 687 So. 2d 1325, 1326 (Fla. 4th DCA 1997) ). But both provisions are intended to protect an individual's home. See generally McKean v. Warburton, 919 So. 2d 341, 343-44 (Fla. 2005) ("The Florida Constitution ... protects homesteads in three distinct ways: it provides homesteads with an exemption from taxes [ ( article VII, section 6 ) ]; it protects homesteads from forced sale by creditors [ ( article X, section 4(a) ) ]; and it places certain restrictions on a homestead owner from alienating or devising the homestead property [ ( article X, section 4(c) ) ]."). And the public policy involved with both provisions is the same: "The public policy furthered by a homestead exemption is to ‘promote the stability and welfare of the state by securing to the householder a home, so that the homeowner and his or her heirs may live beyond the reach of financial misfortune and the demands of creditors.’ " Chames v. DeMayo, 972 So. 2d 850, 853 (Fla. 2007) (emphasis added) (quoting McKean, 919 So. 2d at 344 )).
While "this policy is less compelling in the context of providing a homeowner an exemption from taxes than in the context of protecting a homeowner from a forced sale of his or her property," Baldwin, 279 So. 3d at 336, it is not wholly without implication in the tax exemption context. Certainly, financially penalizing citizens for renting space in or working out of their homes is not in line with the goal of enabling citizens to "live beyond the reach of financial misfortune." See Chames, 972 So. 2d at 853.
Neither Karayiannakis nor chapter 196 define the term "commercial purpose." And while it is abundantly clear that operating a multifamily apartment building of individual autonomous units is a commercial purpose, it is not so clear that the rental of one or two bedrooms with lockable doors in a single-family residential home is. Appellants argue that Rebholz was operating a business, making a profit, and declaring the rentals as a business expense deduction on his taxes, but no such evidence was presented at trial. This court can no more speculate that Rebholz was operating a business by renting these bedrooms than we could assume that he was renting the bedrooms to help pay his bills and taxes or that he simply opened up his home due to a lack of regular social companionship. In any event, Rebholz's reasons for renting space in his home are immaterial for purposes of our analysis here.
III. CONCLUSION
Based 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. Any 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. Accordingly, we must affirm the portion of the final judgment retroactively restoring the homestead exemption to 100% of Rebholz's residence and awarding a refund of improperly paid taxes. However, because section 196.012(13) is not applicable to the issues presented by this case, the trial court erred in addressing the constitutionality of that statute. We therefore reverse the portion of the final judgment finding that section unconstitutional as applied.
The issue of whether the establishment of a commercial enterprise upon property contiguous to the permanent residence would be subject to assessment for ad valorem taxation is not before this court, and nothing in this opinion should be read as addressing that issue.
Affirmed in part; reversed in part.
VILLANTI, J., Concurs.
ATKINSON, J., Concurs in result only in part and dissents in part with opinion.
ATKINSON, Judge, Concurring in result only in part and dissenting in part.
One cannot simultaneously reside in a residence and rent out that residence for another's exclusive use as a residence. The Florida Statutes are consistent with that reality. See, e.g., § 196.061, Fla. Stat. (2015) ("The rental of all or substantially all of a dwelling previously claimed to be a homestead for tax purposes shall constitute the abandonment of such dwelling as a homestead ...."); see also art. VII, § 6, Fla. Const. (providing for homestead taxation exemption to property owners "upon establishment of right thereto in the manner prescribed by law").
The evidence supports that the property in question was apportioned into separate residences which Rebholz rented out to others. His homestead does not encompass those portions of his property that he rented out; Rebholz did not "maintain[ ]" his "permanent residence" in the rooms in which others maintained their own residence pursuant to a rental agreement. See art. VII, § 6, Fla. Const. (providing homestead taxation exemption to one "who has the legal or equitable title to real estate and maintains thereon [his or her] permanent residence"); § 196.031(4) (providing that the homestead tax exemption "applies only to those parcels classified and assessed as owner-occupied residential property or only to the portion of property so classified and assessed" (emphasis added)). As such, the trial court erred by reinstating the homestead exemption on the entire property.
Accordingly, I would reverse. I respectfully dissent from the majority opinion affirming the final judgment of the trial court, but I concur in result only with that portion of the majority opinion reversing the trial court's finding that section 196.012(13) is unconstitutional.