Property Tax Reform: How Do You Spell Relief?
When voters head to the polls on January 29, they have the opportunity to reduce the property tax bill for thousands of homeowners—if they vote YES on Amendment 1.
“I urge all members to vote YES on January 29,” says Nancy Riley, 2007 President of the Florida Association of Realtors® (FAR). “By no means is this amendment the final word on property tax reform. But it’s the only amendment on the ballot that can bring much-needed tax relief to property owners. No other referendum can be placed on the January ballot, so the next opportunity for meaningful reform would be November 2008. If approved, taxes would drop two years from now. Property owners can’t afford to wait that long.”
The amendment, the result of a special session of the Legislature last fall, the second such special session called to remedy Florida’s property tax system, is expected to save taxpayers about $12 billion in the first four years. Here’s how:
• Double the homestead exemption for 94 percent of homestead property owners.
The current $25,000 homestead exemption remains; but a second $25,000 exemption is added for home-value between $50,000 and $75,000. The second $25,000 exemption does not apply to school taxes, however. The portion of home-value between $25,000 and $50,000 will still be taxed at all levels. Homestead owners will save about $240 a year. FAR fought to include this taxable portion in order to maintain fairness for smaller cities and counties with lower median home values.
Allow owners of homestead property to transfer up to $500,000 in accumulated Save Our Homes benefits, including school taxes, to a new home. If buying a more expensive home, a homesteader calculates savings by subtracting the assessed value (taxable value) from the just value (market value). The amount (savings over time) is then subtracted from the just value on the new home purchased. In most cases, the $50,000 homestead exemption will also be subtracted.
If buying a less expensive home, the calculation changes and is based on the percentage of tax savings rather than a dollar amount. If the assessed value on the original home was 50 percent of the just value, for example, the homesteader would transfer that percentage to the new home, or have a new assessed value that is 50 percent of the new home’s just value.
Portability would be retroactive to Jan. 1, 2007—good news for clients who upsized or downsized last year, says Riley. “A lot of homesteaders are sitting on the sidelines waiting to see what happens with property tax reform,” she adds. “Why wait? Now’s a great time to buy.”
• Impose a 10 percent assessment cap on non-homestead property for the next 10 years.
The cap does not apply to school taxes. After 10 years, voters will have the option to restore the 10 percent cap.
• Allow businesses to exempt $25,000 in taxes paid on computers, office equipment and other tangible personal property.
“Amendment 1 is a reasonable first step toward fixing the inequities of the current property tax system and strengthening the Florida economy.” Riley adds. “With its passage, FAR can focus on additional tax reforms during the 2008 session. We’ll press lawmakers to lower and/or cap property taxes for first-time homebuyers and non-homestead owners—second/vacation homes and commercial property. We’ll work to substantially change the application of highest and best use. And we’ll restore confidence in the Florida housing market.”
Learn more about the benefits of Amendment 1 at http://yeson1florida.com