Preventing Homestead Fraud in the Sunshine State

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There are many financial benefits to having a homestead exemption on a property. In the state of Florida, property owners who declare a home to be their primary residence are eligible to receive a homestead exemption or deduction off a property’s assessed value up to $50,000. The first $25,000 applies to all property taxes and school district taxes. The additional $25,000 exemption applies to the assessed value of a property between $50,000 and $75,000 and non-school taxes. A homestead exemption can result in hundreds of dollars in tax savings.

Many property owners qualify for even bigger savings under the Save Our Homes state constitutional amendment, which was enacted in 1995. The law states that the taxable value of a homestead property cannot increase by more than three percent per year, even if the market value rises. The Save Our Homes cap sometimes creates tax disparities between similar residences, where some homeowners incur tax bills that are double or triple that of a homeowner, who secured a low rate. This disproportion can motivate some homeowners to seek a homestead exemption on properties that aren’t eligible, including rental properties or second homes, opening the door wide for fraudulent claims. The Miami Herald reports on a successful fraud solution that Miami-Dade County law enforcement has implemented, recently identifying $6.2 million in violations over a two-month period.

In order to track down and prevent homestead exemption fraud from occurring in Miami-Dade County, additional police detectives have been deployed in nine cities including Coral Gables, Hialeah, Key Biscayne, Miami, Miami Gardens, Pinecrest, South Miami, Sweetwater and West Miami. The extra manpower enabled the identification of additional ineligible property owners, generating more property-tax revenue for the cities. Homeowners, who have illegally obtained homestead exemptions, lose the deduction and have to pay back taxes, penalties and interest. (That’s a big chunk of change.) If the obligations are not paid within 30 days, a lien is placed on the property.

Kudos to the Miami-Dade Property Appraiser, who has made it easier for the public to report homestead fraud by adding an online form on its website. Miami’s commissioner should also be commended for encouraging other municipalities to hire additional investigators at a cost of between $50,000 and $100,000 per year. This seems like a small cost to incur as compared to millions of dollars in revenue that can be recovered.

Source: Today’s ”Fraud of the Day” is based on the article titled, ”Police Task Force on Homestead Fraud Reaps Results,” written by Martha Brannigan and published in the Miami Herald on October 11, 2013.

MIAMI – Deploying police detectives from nine local cities to bolster homestead fraud investigations in Miami-Dade County is reaping fast results, according to the property appraiser.

Miami-Dade Property Appraiser Carlos Lopez-Cantera said with the extra police muscle, $6.2 million in violations were identified across Miami-Dade for September and October, compared with $3 million during June and July before the task force got started.

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.