There is a lot going on in Florida right now concerning the issue of property taxes. Recently a new property tax bill was proposed and has been received with mixed emotions by Florida residents. Some think that this new bill looks great and indeed for some it will be quite nice, however, some sectors believe that the bill is not broad enough to solve some of the past inequalities in the home tax system. The current system which is known as "The Save Our Homes Amendment" states that a property's assessed value cannot rise more than 3% a year however that does not apply to new construction homes.
Here is how the newly proposed plan breaks down:
On your primary residence, there will be a 75% exemption on the first $200,000 of assessed value and an additional 15% exemption on the next $300,000 in assessed value. So if your home has an assessed value of $500,000, you would receive a $150,000 exemption on the first $200,000 in value, and an exemption of $45,000 for the next $300,000 in value, resulting in a total exemption of $195,000, the maximum benefit under the new plan. Homes valued at $50,000 or less are completely exempt and if you qualify as a low-income senior you're completely exempt up to $100,000.
This proposed bill is expecting some level of opposition from sectors such as Police, Firefighters and Teachers as it appears that there are some budget cuts that are part and parcel of this tax bill. There is also concern that this bill may not correct the inequalities that were mentioned earlier in this article. As an example: a home purchased 10 years ago pays approximately $5,000 in property tax while a new home in the same area with the new tax system is looking at paying around $7,000, thereby putting a disproportionate amount of tax responsibility on new Florida residents and home owners. The owners that this will affect most significantly are those who own homes in the $200k to $300k range. However as Florida is a popular place the average price of new homes is reaching towards $400k and up. The reality is that this bill will make it more difficult for home owners to trade up to a new residence as the increased tax bill will add thousands to their yearly expenses. Now, this bill has not passed yet, but it could drastically affect the state of home buying and sales in the state of Florida.
Florida Property Tax Calculator
Eight meetings are scheduled in various locations across the state. On February 13, 2007, the Legislative Hearings on Property Tax Reform were held in Miami. The author of this article attended, both to hear what others had to say and to put in his own two cents worth.
The Committee's Charge
The Committee was charged with responsibility to consider, at a minimum, the following:
• Consequences of property tax exemptions and assessment differentials;
• Appropriateness, affordability and economic consequences of property taxation levels in Florida;
• Alternative methods of assessment, including, but not limited to, split-rate and land value taxation;
• Replacement alternatives to property taxation as sources of public funding, including increased sales taxes; and
• Limitations on local government revenue and expenditures.
Topics addressed at preliminary sessions of the Property Tax Reform Committee and at Legislative Hearings on Property Tax Reform convened at Panama City, Jacksonville, West Palm Beach, Fort Lauderdale and Miami, include the following ideas:
• Assess business property based on current use only, instead of “highest and best use” value.
• Cap tax revenue growth for individual local governments.
• Cap tax increases on individual properties or classes of property.
• Full or partial replacement of the property tax with other forms of taxation.
• Assess properties using a moving average value of several years' assessments instead of using just the current year's value.
• Simplify the “Truth in Millage” annual notice of proposed property taxes to be more easily understood by taxpayers.
• Increase the amount of homestead exemption and/or index it by percentage of value.
• Institute “portability” or transferability within Florida of the Save Our Homes cap, in whole or in part.
• Phase-out the Save Our Homes tax preference.
• Partial-year assessments of improvements to real property.
• Improve or limit agricultural use classification regulations.
• Protect homestead-related property tax benefits when property is taken for public use by eminent domain.
• Protect homestead-related property tax benefits upon relocation required by military service
A preliminary report was issued by the Committee in December 2006. A mid-term report is due on or before March 1, 2007, and a final report no later than December 1, 2007. Ultimately, the Committee is charged with responsibility to issue recommendations to improve property taxation in Florida through a comprehensive approach, with an emphasis on simplifying the system for all taxpayers.
The responsibility with which the Committee is tasked is fraught with difficulty, since any adjustment to the current system has repercussions throughout the remainder of the property tax administration system of the State. Think of it as a water balloon; if you squeeze one side, the volume of water displaced expands the rest of the balloon. The metaphor is not exactly Archimedean, but it does give you a visual image of the problems involved.
Notably, most of the changes being considered may require a constitutional amendment before implementation. This means that the most the Legislature can do is propose constitutional amendments. After that, it will be up to the voters of the State of Florida whether the proposals will be adopted.
Both Calum And Kathy Mackenzie & Daniel Weiss are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.