Fort Myers No Spin Zone : Florida’s Property Tax Reform

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Florida’s Property Tax Reform

By: Gary Szolosi
Monday, January 28, 2008 11:37 AM

January 29 Floridians will be voting on a proposed change in the way property taxes are calculated. The big selling point on voting “Yes” addresses resident Floridians that qualify for Homestead Exemption. This provision now states that the resident’s property tax is capped at a maximum of 3% (SOH) increase a year and they are given a $25,000 exemption in value. For those that own property in Florida this exemption is not available.

The new proposed tax increase the exemption amount by about $15,000 and allows the portability of the SOH amount to be taken to the next home. The SOH amount is the difference in the appraised value that exceeded the 3% cap. The new proposed tax also does put a cap on non-resident property at 10%.

I have often said that our property tax is unfair to non-residents and this new proposal fall short of addressing this issue. Although the 10% cap is a start it is far to low and should be the same for both residents and non-residents.

The biggest problem tomorrow will be how to vote on this issue. To vote no means, no change and may be viewed by legislatures that it is not a big problem, as well as delay a reduction in property taxes. To vote yes means the chance of further changes for the non-resident are diminished because residents will have received their decrease and it takes 60% voting yes to further change the issue. Once again the legislatures have failed to address the problem and offered a solution that gets them out of hot water but doesn’t fix anything.

I will be voting NO tomorrow even though I feel the change will pass. To vote yes on an incomplete bill that doesn’t address non-residents in a fair manner is doom for any further correction to an unfair system. The 3% cap should apply to all owners of property in Florida and until it is addressed Florida Real Estate is at a disadvantage to neighboring States. Equitable solutions are the only fair way to address the problem and although I hate to not have my taxes go down as a resident, I think NO on this vote and force the legislatures to do it right and put an equitable plan on the next ballot. The argument against a NO vote is, take what you have and work for more. However, because of the 60% needed to get further change and non-residents don’t have a vote that is a lame argument and one doomed to failure.

Comments

Member Since '03	Gregory Bain said: Good Luck, Gary! There is no such thing as "tax reform". If you cut in one place you must raise it some where else. That normally hurts more than the problem the politicians wanted to fix. NJ has been "working" on this problem for years. When one guy tried to fix it they threw him out and elected a lady who was known as the friendly utility board member - never voted against a rate hike. She stole money from the public pension to pay Paul. The only way to reduce taxes is to cut spending. And, no one wants to give up their "entitlements" today. I can't wait to hear the state of the union address tonight. In the good old days we used tar and feathers to anyone who created such a mess. January 28, 2008 11:30 AM
Member Since '06	Cathy Clark said: Gary, I think I would have to agree with you (Saints Preserve Us!). Living and working where I do, we have a lot of snowbirds who summer on the Cape (primary residence) and winter in FL. Since their primary residence is MA, they may not even be able to vote in FL, if they are registered in MA. Most of the retirees I know are registered in MA and vote absentee from FL. So any vote on this proposal probably won't be completely representative of the tax-paying population and favors those who make their primary residence in FL. Property taxes (and homeowner's insurance) are most often cited as the reason people are not buying (or selling) in FL. January 28, 2008 11:47 AM
Member Since '03	Gregory Bain said: Sorry! Serenity Now, Serenity Now. January 28, 2008 2:00 PM
Member Since '05	Gail MacMillan said: Hi Gary, I agree, the bill is incomplete - but - I am voting "yes"! No change is status quo and I want something~anything to change. These politicians are so used to leading us around by the nose ring and complicating verbiage to the point of wearing us out, that they just expect we'll let them handle it for us - NOT!!!. A few weeks ago, a liason between FAR and Washington addressed a WCR luncheon at our board. He said the politicos don't want to tackle this issue and if we let them off the hook they will do a fast disappearing act and it won't be till 2010 that we can bring it up for a vote again. My God - 2 more years of no change :-( You said it yourself "To vote no means, no change and may be viewed by legislatures that it is not a big problem". I'm for taking this offering and trying for more later. January 28, 2008 3:04 PM
Member Since '03	Gary Szolosi said: Gail, I have tossed this around and you are where I have been until I thought about how difficult it will be to get people interested in helping non-residents share an equal part of the tax burden. It won't happen. This provision does give some relief and perhaps I am wrong in not accepting less than good. I know I have voiced my disappointment with the proposal from Charlie Christ on down with little acknowledgement or acceptance of my stance. Perhaps we need a Florida Tea party for the non-residents. This will be a lose/lose proposition but perhaps a minor victory for the non residents is all we can ever hope for since it does put a cap on increases. I will toss this around until in the poll tomorrow. Our Board is encouraging us to vote yes based on the same premise you raised. I just have no hope in getting 60% yes after we get a tidbit for all. January 28, 2008 4:31 PM
Member Since '05	Cyd Weeks said: I too will be voting YES! to the proposal. While it's not the best they could do it certainly is something. And you've left out one of the biggest pluses in the proposal...that of portability. It will release thousands of Floridians who have been stuck in their homes because of the way the tax has been structured in the past. The Homestead Act was for permanent residents to protect them and insure they are not forced out of their homes due to high taxes. If they move within the state, why should they have to give that up? With this reform, they wouldn't have to. It's there for the homeowner that lives here, not the people who are priviledged enough to have more than one place to live and lucky for them this proposal still addresses them somewhat. January 28, 2008 5:39 PM
Member Since '03	Gary Szolosi said: I did touch on SOH and think that is a good thing. However, I didn't realize that the property tax system was based on whether or not you were "Privileged". I have some school teachers that are retired and own two homes and would probably not put themselves in the "privileged" class. For some reason or another Florida has chosen to treat them as you say as privileged people and unworthy of fair taxation. Let's see, they use less services, probably have no kids in school any more, drive less on the roads, etc... yet pay a higher share of the cost. Hell, that sounds fair to me. Let's not change a thing. You see that is the exact reason once this bait gets passed there is no hope to protect 30% of the residents of Florida that are not full time, permanent residents. That is a big part of our economy and a big part of the Real Estate market. January 28, 2008 6:10 PM
Member Since '05	Cyd Weeks said: Please, do not misinterpret what I am saying. It's a blessing to own your own home to begin with and in my opinion a previledge to be able to have a second home. I'm not talking about wealth or class here. And last time I checked, SOH did not include portability which is a MAJOR benefit for those who the SOH was written for...the primary homeowner. I certainly am not going out to vote for or vote against a proposal because I think it would be good for the Realtor® or the real estate market and second home owners. I'm a full time resident..I would like the changes in the rules to benefit myself and other full time residents as it was intended FIRST and then we move on to the others. The proposal gives a cap for them. That's a start. I would have supported a more drastic change if there was one that was viable and workable for all. But I do not apologize for Florida having the tax system that benefits full time residents over those that have a second home. Those people in other states, where their primary home is, are reaping the tax breaks they get in their home state. Let's not lose sight of that. If I had a 2nd home in another state I would not qualify for their tax breaks either. January 28, 2008 8:46 PM
Member Since '03	Gary Szolosi said: Cyd let's talk fairness since I am not talking privilege or class. Here is an example: John Doe is an Ohio resident and is retired. His dream has always been to spend his cold winters in Florida but his summers in Ohio with his grand-kids. He has a Home in Ohio he sells for $200,000 and but a Condo for $100,000 and buys a second condo in Florida for $100,000. His taxes 4 years ago when he bought it were $1,500. His Condo now in Florida has a Taxable Value of $300,000 and taxes of $4,500. This only after 4 years. The problem is that the real Market Value is only $175,000 to $200,000. His neighbor does the exact same thing but he spends over 6 months in Florida so he claims Florida as a resident. His tax on the same place with the same values is about $1,900. The third party is John Smith, he sold his home for $400,000 and bought a $400,000 home in Florida at the same time. His taxes would be about the same as John Dos because he was a resident. I have a great deal of difficulty seeing how that system is fair for non residents. Now you will probably agree that is not a fair system and my argument is that if I vote Yes and put through this bill, how will we ever make the system fair for the non-resident once we have portability and higher Homestead Exemption. It takes 60% yes to get this done so once the residents receive their correction do you think they will vote for the non-residents. Florida had the lowest increase in population 2007 it has had in decades. Our property taxes are a big reason. 30% of homes in Florida are owned by non-residents. They contribute to our economy and are a big part of the success of Florida. So the Yes vote will do more than lower Residents property tax, it could be an end to the allure of Florida to at least 2010. The ramifications go far past the savings for residents. January 28, 2008 9:08 PM
Member Since '06	Nina Schultz said: I'm voting No! I guess it's better than nothing! We Florida realtors depend on vacation home buyers. Portability for residents may happen but they won't be moving in Florida, they will be getting out if they sell. I believe the realtors supporting this believe that locals will move locally. It won't happen because the homes cost more and the taxes are more than their present homes even with the double exemption. Commercial properties won't be selling, and business people will not be coming to Florida. There may be more to this than we see though. It might be to dig ourselves in deeper with homestead, then Floridians will finally realize homestead needs to be eliminated. I just hope that the Realtor Boards and FAR aren't hurting themselves by supporting this. Remember when we were blamed for protesting taxes because we weren't making the income we had become accustom to? The same could happen again by the public. January 28, 2008 10:08 PM
Member Since '05	Cyd Weeks said: In my opinion, part of the issue had to do with increasing property prices. I am busier now than I have ever been due to the pricing of homes decreasing. Those looking to purchase 2nd homes are here because they are affordable. With the cap now being offered they will be even more affordable. As the price of the home decreases, so do the taxes through adjusted appraised values. Everyone has the opportunity here to protest their taxes (we do in my county, perhaps you can't other places) if you feel your home 'market value' is too high and I urge all of my customers to do so, resident or not. I'd love the opportunity to have the ability to have a place up in NY and a place down here. If I make the place down here my residence I get a certain tax break but lose out on the STAR tax break up in NY and pay more taxes than my neighbor. If I make NY my residence, I get the STAR program but I lose out on my tax break here. I'm not sure what makes you think Florida is in any different situation than many places. Yes, they pay taxes. No they don't have protection the same as residents. And I don't think they should as is in many other states. I'm not worried about Florida. As I said, I would have looked closely and may have supported the other proposal to remove the tax altogether and raise the sales tax. But that's off the table. So, I'll take the portability (which to me is HUGE) and the increase in the resident deductions. I would support it if it was just portability on the table. To me, that is the largest issue right now. And I see no reason why the rest of it can't be addressed afterwards. January 28, 2008 10:14 PM
Member Since '03	Gary Szolosi said: The great thing is there are always two sides to a coin. Debate is good but I have no more to add. I hope we can resolve this issue and that when all is said and done, the end result is one that addresses what is good for both Florida and Non-Florida residents. There are valid issues on both sides and until I poke that chad and makes sure it hangs, I will not know which way my vote was recorded. It is now a Florida tradition. January 28, 2008 11:02 PM
Member Since '05	Cyd Weeks said: It passed. YAY! But then again, I see a lawsuit was filed already. :) I don't know why anyone is so negative about Florida. They should live in the northern states and then decide. We'll agree to disagree. January 29, 2008 9:58 PM
Member Since '06	Cathy Clark said: I don't see where anyone was being negative about Florida, Cyd. Unfortunately, if tax laws are slanted against seasonal residents, their will be fewer of them contributing to the Florida economy. Maybe you view the snowbirds as priveleged residents but the ones I know are former working class stiffs who raised their families, didn't mortgage their future, scrimped and saved all their lives to get their piece of the American Pie. Most are on a fixed income with some savings that is rapidly depleting because of property taxes and insurance. They are now faced with giving up part of their slice. Since your neck of the woods is so much more expensive than ours, they're trying to unload that slice, hence the high inventories and declining values. I hope the year-round population can bear the burden of living there once the snowbirds find another alternative. Good luck with that. January 30, 2008 7:59 AM
Member Since '03	Gary Szolosi said: The law suits were filed prior to the passage and I am sure there are more to come. The passage will only help the suits and there is a very good chance the portability will be struck down. It is a shame because the legislators knew this before they removed a provision that would have provided equitable discounts for new residents and non-residents. They are contending that portability offers a resident unfair advantage in purchasing a home and this is unfair to someone without portability. Therefore it violates federal commerce law. Basically if an existing home owner has up to a $500,000 discount on property taxes and I am a new resident trying to purchase the same home, he/she has an unfair advantage due to this discount. They have a very valid point and legal scholars agree that it will probably be the down fall of portability since the legislatures removed the only provision that would have attempted to provide some equity. This is why poor planning and a rush to quell discontent is often more show than actual change. You can't just address one part and hope the other goes away. January 30, 2008 1:26 PM