| Tax reform is one of the hottest topics in Florida real | | | | that they could raise from homeowners, more and |
| estate these days. In the past month, we’ve | | | | more of the tax burden fell on the shoulders of |
| heard a lot of politicians applauding themselves for | | | | business owners, landlords, first time home buyers |
| the passage of important new tax reform bills. They | | | | and snowbirds who own secondary residences here |
| deserve the applause – but only if they continue | | | | in Florida. |
| on the path they’ve begun. This is not the time | | | | The recent bills passed by the legislature are a |
| for them to rest on their laurels. It is important for all | | | | positive step. The House bill does two things: |
| of us to remember that the lawmakers have only | | | | - It requires an immediate tax cut which will provide |
| partially addressed the inequities in the tax situation. | | | | much needed tax relief to all property owners in |
| A few facts are indisputable: | | | | Florida. Since this bill affects the overall tax revenues, |
| - Real estate taxes overall have doubled in the past | | | | its benefits will be felt by everyone. In addition, the |
| ten years. | | | | tax cuts do not affect levies tied to education, which |
| - Save Our Homes has contributed to a serious | | | | has been a major concern for many critics of the |
| inequity in the way that the tax burden is | | | | proposed tax cuts. |
| apportioned. | | | | - It caps the rate at which taxes can rise and ties it |
| - The combination of rising home values and rising | | | | to the rise in per capita income in individual |
| taxes has made owning real estate in Florida an | | | | municipalities, counties and districts. Thus, taxes can |
| expensive proposition. | | | | only rise in sync with rises in per capita income. |
| - The separation of property owners into “tax | | | | The amendment proposed by the Senate addresses |
| castes” has had a serious depressing effect on | | | | the inequities caused by Save Our Homes – but |
| the Florida real estate market. | | | | does not eliminate them because it does nothing to |
| - Tax reform must be a multi-pronged approach | | | | address the unequal distribution of the tax burden, |
| which addresses all of these issues. | | | | with the lion’s share of it falling on those who |
| Ten years ago, legislators realized that the | | | | own properties that are not their primary residences. |
| combination of rising home values and rising taxes | | | | The proposed amendment begins the task of |
| had created a situation where many long time | | | | unwinding Save Our Homes, and does so without |
| homeowners were in danger of losing their homes. | | | | sharply affecting those who currently benefit from it. |
| Because taxes are based on the home’s | | | | It does not, however, address the fact that renters, |
| assessed value, the sudden burgeoning of home and | | | | second homeowners, investors and business owners |
| property values in many areas doubled and | | | | are unfairly shouldering more than their share of the |
| sometimes tripled taxes in a year. In order to | | | | tax burden. Under the new plan, homeowners will |
| address the problem, the legislature passed Save Our | | | | have the option to keep their Save Our Homes cap |
| Homes. Save Our Homes was designed to limit the | | | | or move to the new system immediately. In fact, |
| rise of taxes on primary residences by limiting the | | | | about 73% of homesteaders will benefit from an |
| rate by which their tax assessments could rise to | | | | immediate change, as will new home buyers and first |
| 3%. That means that if the home in which you live | | | | time home buyers. Those who are better off under |
| was assessed at $100,000 last year, this year its | | | | the old system can elect to stay with it unless and |
| maximum assessment is $103,000 even if the actual | | | | until they move. Landlords and business owners will |
| value of your home rose to $400,000 this year. | | | | still pay more than their share of taxes because |
| Save Our Homes seemed like a good idea. The | | | | there is no exemption available to help them keep |
| intention was a good one – to ensure that no | | | | rents and business expenses low. |
| one was forced out of their home because their tax | | | | Those who purchase new homes will receive the |
| bill had suddenly become unaffordable. Unfortunately, | | | | same level of tax exemption as those who have |
| Save Our Homes had some unexpected | | | | lived in their homes for years, making the new |
| consequences due to oversights in the amendment. | | | | amendment fairer to all homesteaders rather than |
| - Save Our Homes is not portable. Thus, if you | | | | giving those who have owned their properties longer |
| moved from one home to another of the exact | | | | – or who are buying their first homes – an |
| same market value, your tax bill could suddenly triple. | | | | unfair extra tax break. |
| The effect of this was to “trap” people in | | | | The amendment also includes a personal property |
| homes because they’d be unable to afford the | | | | exemption for small business owners which will allow |
| taxes on a new home even though the home had | | | | most businesses to exempt $25,000 in personal |
| the exact same value. In fact, within a few years of | | | | property from the property taxes, a substantial |
| the amendment’s passing, most people would | | | | benefit. In addition, it allows the legislature to set |
| have seen tax increase if they moved to a home | | | | lower assessment standards for certain properties, |
| with a far lesser value. | | | | including waterfront and affordable housing |
| - The effect of Save Our Homes is indirectly tied to | | | | properties, reserving the right to make further |
| the length of time that you’ve owned your | | | | changes as their benefits become clear. |
| property because the starting assessment is the | | | | While the proposed amendment and tax cut are not |
| market value of the home at the time that you | | | | cure-alls, they are an important first step in the right |
| bought it. Thus, two people living in identical condo | | | | direction. The Florida Association of Realtors applauds |
| units side by side in the same building could be paying | | | | the passage of the tax reform bills and supports the |
| widely different property taxes because they bought | | | | amendment that will be voted on by voters in |
| their units at different times. | | | | January. FAR also, however, makes it clear that they |
| - Save Our Homes only applies to primary residences. | | | | will hold lawmakers responsible for finishing the job |
| While this may suit the original intent of the | | | | that they’ve begun. The new legislation will only |
| exemption, it has contributed to a rising inequity in | | | | mean anything if they continue to work toward |
| tax rates between homesteaders and those who | | | | restructuring the Florida property tax system to |
| own property but do not live in it. Because | | | | provide equitable distribution to all property owners in |
| municipalities were restricted in the amount of taxes | | | | Florida – even those who do not have a vote. |