Florida Property Tax Rollback

Legislators recently completed a special session to deliver the largest tax cut in Florida history. The plan passed by lawmakers is a two-part proposal.

The first part of the plan includes a freeze on tax rates. The Legislature voted to freeze property tax rates at last year's level. Property owners will benefit from the rollback with an average savings of $174 for homeowners, and an average savings $1000 for commercial property owners. Under this component, cities and counties will also be required to cut taxes to either 3,5,7 or 9 percent, with the larger reductions required for counties and cities where property taxes have increased the most in recent years.

Florida voters will have the opportunity to vote on the second part of the plan. Lawmakers proposed a constitution amendment to create a "Super Homestead" exemption giving property owners the option to switch from the current Save Our Homes exemption to the new one. Save Our Homes is the Florida homestead exemption passed in 1992 that limits residential property tax increases to no more than 3% per year. Under the new "Super Homestead" exemption the first $200,000 of a home's value would be 75% exempt. The next $300,000 would receive and additional 15% exemption. A home valued at $500,000 would receive the maximum exemption of $195,000.

Homeowners will have a one-time only option to choose to remain under the "Save Our Homes" exemption or switch to the new "Super Homestead" exemption. Once their decision is made, they will not be able to change it.

Small business owners will also get a break under the new proposal. The first $25,000 in assessable Tangible Personal Property will be exempt.

Neighbor vs. Neighbor
Under the current Save Our Homes exemption, some residents are stuck paying higher property taxes than their neighbors. This is because they purchased their homes later than their neighbors and at a higher tax rate. The new proposal is designed to create a fairer system of calculating property taxes and to even out the property tax burden.

Stuck in my house!
Some homeowners have found that they are "trapped" in their homes because of the Save Our Homes exemption. They are unable to sell their house and move to a bigger or smaller home because if they do, they will lose their tax protection. The tax bill on their new residences would be so much more than they are currently paying that homeowners are deciding to stay put. Under the new proposal, if you purchase a new home, you will be eligible for the "Super Homestead" exemption and a savings on your property taxes at your new residence.

Benefit: A Healthy Real Estate Market?
Another possible benefit to the new proposal is the Florida real estate market could get a real boost. Due to their fear of paying higher property taxes, many homeowners have opted to stay in their homes. The end result means fewer homes are up for sale. The limited supply of available homes creates higher prices. Higher prices mean less people are able to actually afford a new home. Homebuyers will not lose tax protection when they sell their homes under the new proposal and may be more willing to trade up to a new house.

They Could Have Done More
As usual our politicians have completely ignored or missed the point! The tax issue has never really been about capped homestead property. Yes it would have been beneficial to the retired property owners to have some kind of "Portability" with their tax bills, when purchasing a new home. Let's face facts though and realize that most retired people pretty much stay put until they have to sell and then move in with the kids or to assisted living, etc.

The tax problem/tax revolt deals with the 40-45 percent of the retired, second home, and investment owners. Florida has done virtually nothing to offset the tax burden for them! Rolling taxes back to the highest assessed year and no caps is a joke. The average tax savings will be about $195. It's as if our government has completely forgotten about these people or are sending a message that "if you want stay in Florida or invest in Florida, suck it up and get used to it!" What if you are retired, are living in Florida and have purchased some income producing rentals? Now like day to night your taxes and insurance has quadrupled, you're so upside down you have no choice, but to sell out in a declining market, tuck your tail and try to stay retired!

It remains to be seen the real effect our government's short-sightedness will have on the tax payers of this state, but I sure wish I was selling real estate in states just north and west of Florida!

It's up to YOU...maybe?
Florida voters will have the opportunity to vote on the "Super Homestead" in the presidential primary on January 29, 2008. If 60% of the voters approve, the bill will become law. But the proposal may not make it to the ballot if a lawsuit filed by Weston Mayor Eric Hersh is successful. The lawsuit calls for a repeal of the tax cut and for the amendment to be scrapped. In a recent order, the Florida Supreme Court directed the case be given "expedited consideration" and transferred it to the Leon county circuit court. If the courts side with Hersh, Florida voters will be out of luck and the Save Our Homes exemption will remain.

I urge anyone who has an interest in Florida's future to contact their local and state representatives and let them know how strongly we wanted a fix and not a band-aid solution.