TBO.com - TBO is Tampa Bay Online

Email Print

State Takes On Inequities In Property Tax - Again

ADVERTISEMENT

By JEROME R. STOCKFISCH, The Tampa Tribune

Published: October 14, 2007

TALLAHASSEE - The Legislature hopes to pass a property tax relief package at midweek and have the language on the Jan. 29 ballot as a constitutional amendment.

Lawmakers have softened their approach and taken up Gov. Charlie Crist's more modest proposal to double the homestead exemption from the existing $25,000 to $50,000. That would lower the taxable value of your home and, in turn, your tax bill.

The second key element is portability of the Save Our Homes valuation benefit. While home values have soared in Florida, taxable values have risen slowly because of a 1992 constitutional amendment limiting valuation increases to no more than 3 percent a year.

Save Our Homes is at the heart of many of the inequities in the tax system, but it is popular, especially among longtime homeowners whose tax bills have risen gently while their home values soared.

Under current law, homeowners lose this benefit when they move. The proposed legislation would allow buyers of new homes to apply their Save Our Homes advantage to a new home.

There's good news for those who bought a house or moved this year: The reform likely will be made retroactive to 2007.

We took a look at how the proposed legislation may affect homeowners.

For this exercise, with the help of Tim Wilmath of the Hillsborough County Property Appraiser's Office, we considered people in a home worth $250,000, which is close to the median sales price of $235,000 in Hillsborough County. To compute tax bills, we used a tax rate of 20 mills, with a mill being a charge of $1 in taxes per $1,000 in value. The aggregate tax rate in Hillsborough - the combination of tax rates for city, county and special taxing districts - varies, but is close to 20 mills, or $20 per $1,000 of value.

We couldn't do a property tax story without introducing further complications, of course. To protect education, many of the provisions of the new legislation exempt school districts from the cutbacks. So after the tax bill was calculated, we adjusted the bill, adding back the amount of money that would have been generated by school taxes.

Our examples are based on properties listed on appraisers' databases. They can help you compare the tax bills under the two scenarios.

A Single Man With No Save Our Homes Benefit Who Is Staying Put

Taxable values vary by house, with Save Our Homes benefits reflecting how long a person has owned it and how much property values have risen. For the simplest look at how doubling the homestead exemption would affect a tax bill, let's consider a single guy in a relatively new home with no Save Our Homes benefit who isn't looking to move.

Under Current Rules
Market value of home: $250,000
Homestead exemption: $25,000
Taxable value: $225,000
Tax bill: $4,500
Under Proposed Rules
Market value: $250,000
Homestead exemption: $50,000
Taxable value: $200,000
New tax bill: $4,187

A Young Couple In A House Since 2002 Seeking A Larger Home

This example reflects the fact that even though the Save Our Homes benefit may not be massive, applying it to a new home can help keep down tax bills for those looking to upgrade. The couple have only five years of the Save Our Homes protection in their current home and are looking at buying a $400,000 house.

Under Current Rules
Market value of current home: $250,000
Assessed value: $190,000
Homestead exemption: $25,000
Taxable value: $165,000
Tax bill: $3,300
IF THEY MOVE
Market value of new home: $400,000
Homestead exemption: $25,000
Taxable value: $375,000
Tax bill: $7,500
Under Proposed Rules
Market value of new home: $400,000
"Portable" Save Our Homes benefit: $60,000
Assessed value: $340,000
Homestead exemption: $50,000
Taxable value: $290,000
Tax bill: $6,437

A Family In A House Since The Early 1990s Looking For A Larger Home

Homeowners have complained that even in cases where they can afford a bigger house, they can't necessarily afford the whopper of a tax bill that comes with it because they lose their Save Our Homes benefit when they move. In this case, a family living in the same home since before Save Our Homes began in 1994 would have built up a significant tax advantage. They are eyeing a $400,000 house. Under the Legislature's new scenario, their tax bill would still rise with the bigger house, but the figure would be more in line with the upgrade.

Under Current Rules
Market value of current home: $250,000
Assessed value: $100,000
Homestead exemption: $25,000
Taxable value: $75,000
Tax bill: $1,500
IF THEY MOVE
Market value of new home: $400,000
Homestead exemption: $25,000
Taxable value: $375,000
Tax bill: $7,500
Under Proposed Rules
Market value of new home: $400,000
"Portable" Save Our Homes benefit: $150,000
Assessed value: $250,000
Homestead exemption: $50,000
Taxable value: $200,000
Tax bill: $5,312

A Newlywed Couple Moving In To Their 1st Home

The legislation also targets first-time Florida homebuyers in an effort to spur home ownership by offering a 25 percent discount in the valuation for tax purposes. Many first-time buyers have been scared off not necessarily by home prices but by property taxes. This provision also appeals to those contemplating moving here from out-of-state.

Under Current Rules
Market value of new home: $250,000
Homestead exemption: $25,000
Taxable value: $225,000
Tax bill: $4,500
Under Proposed Rules
Market value of new home: $250,000
25 percent exemption: $47,500***
Assessed value: $202,500
Homestead exemption: $50,000
Taxable value: $152,500
Tax bill: $3,593

A Widow In A House For Decades Looking To Downsize

Here is a classic example of what has come to be known in Florida as being "trapped" in a house. A widow who has lived in a $250,000 home since before Save Our Homes came into being, which means she enjoys a huge tax advantage, wants to move to a smaller house priced at $200,000. Under the current scenario, her tax bill would actually rise significantly because she would lose her Save Our Homes cushion. The Legislature hopes to fix that.

Under Current Rules
Market value of current home: $250,000
Assessed value: $100,000
Homestead exemption: $25,000
Taxable value: $75,000
Tax bill: $1,500
IF SHE MOVES
Market value of new home: $200,000
Homestead exemption: $25,000
Taxable value: $175,000*
Tax bill: $3,500
Under Proposed Rules
Market value of new home: $200,000
"Portable" Save Our Homes benefit: $120,000**
Assessed value: $80,000
Homestead exemption: $50,000
Taxable value: $30,000
Tax bill: $1,687

A Widow In A House Since 2002 Looking To Downsize

In this example, the widow hasn't been in her current home as long, so her Save Our Homes benefit is much more modest. Nonetheless, it demonstrates that if she wants to move into a smaller $200,000 home, she won't be facing a higher tax bill for a less-expensive house.

Under Current Rules
Market value of current home: $250,000
Assessed value: $190,000
Homestead exemption: $25,000
Taxable value: $165,000
Tax bill: $3,300
IF SHE MOVES
Market value of new home: $200,000
Homestead exemption: $25,000
Taxable value: $175,000
Tax bill: $3,500
Under Proposed Rules
Market value of new home: $200,000
"Portable" Save Our Homes benefit: $48,000**
Assessed value: $152,000
Homestead exemption: $50,000
Taxable value: $102,000
Tax bill: $2,587

A Couple Who Own A Motel On The Beach

An eight-unit mom-and-pop motel sits on a 16,600-square-foot site. Because developers routinely pay $120 per square foot for land, the property is assessed at its "highest and best use," to tear down the motel and build condos. As a result, the property is assessed at its vacant land value of $2 million. The motel gets $90 per night for its rooms, so under an income approach, the value would be about $750,000.

Under Current Rules
Market value: $2 million
Taxable value: $2 million
Tax bill: $40,000
Under Proposed Rules
Market value: $750,000
Taxable value: $750,000
Tax bill: $24,375

What The Asterisks Mean

*To keep numbers simple, we ignore the widow's exemption and potential exemptions for seniors with limited incomes and disabilities.

**Under the proposed legislation, when a homeowner buys a home of the same or higher value, the full Save Our Homes benefit is portable. When the homeowner downgrades, the amount transferred is proportional. The benefit will remain the same percentage of market value of the new house as it was on the old house, even though it might not be as high a dollar figure.

In other words, in an example above, the widow's total Save Our Homes benefit of $150,000 represented 60 percent of the home's value of $250,000. The new home's value is $200,000, and 60 percent of that is $80,000. That becomes the amount considered portable.

In the second example, her total Save Our Homes benefit of $60,000 represents 24 percent of the home's value of $250,000. The new home's value is $200,000, and 24 percent of that is $48,000. That becomes the portable figure.

This strategy keeps huge Save Our Homes values accrued over many years from wiping a house completely off the tax rolls.

***The discount for new homebuyers cannot exceed 25 percent of the median market value for the county. In Hillsborough, that's $190,000, so the discount is capped at $47,500.

The Tampa Tribune thanks Tim Wilmath of the Hillsborough County Property Appraiser's Office for his assistance with this project. Reporter Jerome R. Stockfisch can be reached at (850) 222-8382 or jstockfisch@ tampatrib.com.

ADVERTISEMENT

Coupons and Deals

Games, Puzzles & Trivia

Advergaming and Branded Media

Oops! Your email could not be sent because of the following errors: