Know the Law Property Tax Reform: The Whole Story “The next property tax bill Floridians receive must be a bill they can afford. Our property tax system is hurting Florida’s families and destroying our small businesses. It must be reformed if we are going to protect and strengthen Florida’s economy for the future.”
—House Speaker Marco Rubio
Think of property tax reform as a work in progress.
The $31.6 billion reform package passed during a special session of the Legislature in June is an ambitious effort to fix Florida’s dysfunctional property tax system. Some changes are already underway. Others could begin early next year, but only if voters approve a ballot referendum to increase the homestead exemption. And there are still issues on the table that lawmakers promise to address next legislative session.
“It took more than a decade—primarily since Save Our Homes was enacted—for the system to break down,” says John Sebree, the Florida Association of Realtors®’ (FAR) Vice President of Public Policy. “The Legislature took the first step in providing tax relief by requiring local governments to rollback taxes. Now it’s up to the people to take the next step by voting in January to reform Save Our Homes.” [See Gov. Crist’s comments on pg. 62.]
Millage Rate Rollback
For the 2007-08 fiscal year, mostlocal governments (except school boards) have to reduce total property tax revenues by a specified percentage (0-9 percent) based on their five-year history of levies. Independent special taxing districts that levy ad valorem taxes are all subject to a 3 percent cut, too.
The legislation also provides for an overall revenue cap limiting what governments can collect from property taxes.
The millage rate rollback, combined with the revenue cap, applies to every class of property: homesteads, commercial property, vacant land and vacation/second homes. This legislation represents the first guaranteed property tax protection for commercial and non-homestead properties in Florida’s history.
Higher Homestead Exemptions?
The second phase of the tax reform plan is a proposed amendment to Florida’s constitution that, if passed on January 29, 2008, will offer homestead property owners a choice of continuing their Save Our Homes protection or choosing a super-
homestead exemption. Once a property owner chooses the super-homestead exemption, however, he can’t change his mind and go back to the Save Our Homes system. Also, first-time buyers and homesteaders who move would have to take the super-exemption.
Here’s how the super exemption works: The first $200,000 of value would get a 75 percent exemption,
then property values between $300,000 and $500,000 would get an additional 15 percent exemption. Homes valued at $500,000 and up would get a maximum exemption of $195,000.
If the amendment passes, the median-priced single-family home ($243,200) would enjoy a $156,480 tax exemption. Under Save Our Homes, that same property receives a $25,000 exemption. For a complete overview of the initiative, check out the Property Tax Reform Toolkit at the Legislative Center of floridarealtors.org.