HJR 33 CS - Homestead Property Assessments

[Joseph Burkeson, CMI]

HJR 33 CS - Homestead Property Assessments
JOINT RESOLUTION by Domino (CO-SPONSORS) Allen; Altman; Brandenburg; Clarke; Glorioso; Goldstein; Harrell; Hasner; Johnson; Kottkamp; Kreegel; Porth; Proctor; Rice; Rivera; Robaina; Sands; Sorensen; Taylor; RECOMMENDED by Local Government Council

Homestead Property Assessments: Proposing an amendment to s. 4, Art. VII of the State Constitution to provide for assessing at less than just value property purchased within one year after a sale of homestead property and established as new homestead property, prohibiting the difference between the new homestead property's just value and its assessed value in the first year the homestead is established from exceeding the difference between the previous homestead property's just value and its assessed value in the year of sale, requiring the new homestead property's assessed value to equal or exceed the previous homestead property's assessed value, and authorizing an exemption from such less-than-just-value assessments for homestead property in a fiscally constrained county subject to voter referendum approval no earlier than November 1, 2009.


Here is what the Tampa Tribune had to say...

Legislators Look At Tax Portability

Skip directly to the full story.
By KEVIN BEGOS kbegos@tampatrib.com
Published: Mar 31, 2006


TALLAHASSEE - State lawmakers today are scheduled to consider an added break for homeowners: Let them carry the tax value of one home to another home, even if the new one is more expensive.


The push for portability, as it's called, would extend the benefits of the 1992 Save Our Homes constitutional amendment, which virtually freezes the value used to determine property taxes for some homes.

The measures under consideration by the Legislature would leave intact a system that favors existing homeowners over people new to the market. Newcomers are taxed on what they pay today for a home, and with Florida's red-hot real estate market, that's often far more than what their neighbors paid in years past.

The Legislature is considering these options:
•Tax portability for everyone, no matter where or how many times they move.
•Allowing portability for senior citizens or the disabled only.
• Setting certain limits, such as a single move within the same county.

"That issue is going to rapidly move to the top of our agenda," said House Speaker Allan Bense, R-Panama City. "The question is how much portability are we going to allow?"

Bense asked Rep. Fred Brummer, R-Apopka, to come up with a single compromise bill to address the issue. Details of that are expected today in the Finance and Tax Committee, and Tampa resident Michael Ferlita can't wait to hear them.

Ferlita bought a home on Chelsea Street East 5 1/2 years ago for $63,000, and now he feels stuck - even though it's gone up in value to about $235,000.

"I can't afford to move," Ferlita said. "The actual tax increase would make my payment out of range. It would go from $600 to about $5,000" even for a slightly larger home in the same neighborhood.

Under current law, the low tax rate that's protected in your current home vanishes when you sell and move to a new home with a higher assessed value.

Who Pays What, Why?

One issue in the debate is how the added tax break would affect those who depend on property taxes - local governments.

Ferlita, a Realtor, has watched real estate assessments soar and wondered, "What are the governments doing with all these windfalls? I can't imagine that the cost of government has gone up that drastically." He has an ally in some state legislators.

"Fairness must be a part of every tax policy," said Brummer, who said the real-estate boom and local government have combined to create a two-tier tax system in which recent home buyers pay far higher taxes.

Local governments "have grown fat on the assessed valuations that have followed our overheated real estate market. They have shown no concern whatsoever for the property tax payer," Brummer said.

He gets an argument on that point from those who speak for local government in Florida.

The property tax is one of the few funding sources that counties have, said Kriss Vallese, a spokeswoman for the Florida Association of Counties. Critics fail to note that expenses have gone up just as real estate values have, in part, because federal and state governments have put new burdens on local government.

Statewide, about $22.5 billion in property taxes were levied by cities, counties and school districts in fiscal 2005, according to the Florida Department of Revenue.

In fiscal 1995, the figure was $11.2 billion. That far outpaced population growth during the same period.

Two property tax control measures adopted in Florida have affected rates - the Homestead Property Tax Deferral Act of 1977 and Save Our Homes in 1992.

The tax deferral act takes $25,000 off the tax value of Florida homes. Save Our Homes restricts any increase in the tax value of a home to 3 percent a year, no matter how much the property has gone up in value.
Other properties, such as businesses and second homes, don't have that cap. Still, Vallese agrees there's a problem.

"With the real-estate market the way that it has been, there are those that are getting stuck in their homes," she said. The association of counties supports some form of tax portability for those it thinks would benefit the most - senior citizens.

Otherwise, Vallese said, county officials across the state fear billions of dollars in lost revenue from unchecked portability.

A Senate staff analysis suggested the figures could be as high as $854 million in fiscal 2010 and $1.6 billion the following year. The loss "would continue to grow thereafter," the analysis said.

Rep. Carl Domino, R-Palm Beach Gardens, isn't convinced by such projections.
He's tried to pass a bill for the last three years that would allow voters to establish portability for any homeowner in the state.

Domino said critics of his proposed amendment to the Florida constitution fail to note that even with local government losses under portability, property tax revenue would still go up each year - just at a slower rate.
"The opponents just won't address these numbers," he said.
Critics also are ignoring other benefits of portability, he said.

For example, Domino believes allowing more people to sell their homes - rather than trapping them with the specter of a big property tax increase - would help the real estate market and associated businesses, such as movers, home renovators, and interior designers.

That rings true with Glenn Goff, owner of Goff & Associates in Brandon.
"I think it would stimulate continued growth and mobility in real estate. I would think it would certainly stimulate the market some more," Goff said.
"When anybody moves from once place to another they are much more likely to purchase a stove, a Jacuzzi," or other consumer items, Ferlita added.

Voters Like Tax Breaks

Underneath the debate, there's one thing all sides agree on. Voters tend to love the idea of portability and property tax protections, even as experts point to problems of fairness.

"It should be a concern to not only the legislators but the citizens as to whether their tax structure is doing things in a fair manner," said David Hudson, a professor of tax policy at the University of Florida College of Law.
While there are never perfect solutions, he sees a problem in the huge gap between taxes paid by existing homeowners and by new buyers.

The tax rate for homeowners should arise from fair market value, Hudson said. "Secondary issues of who owns it should be just that - secondary," he said.

House speaker Bense and other House Republicans seem eager to address the portability issue this year, but Senate President Tom Lee was more cautious. "I support modifying portability, but I want to do it in a responsible way," said Lee, R-Brandon. "I really think the Legislature needs to take a big step back and look at this whole issue. I think a bill this year is going to be a very, very difficult thing to build compromise around."

WHAT'S NEXT

H.B. 33 has passed two committees but is stuck in the Finance and Tax Committee, which is now considering a bill of its own - H.F.T. 7. Check the bills' progress at www.leg.state.fl.us, click House and bills.

Reaching your legislators:

Rep. Carl Domino
R-Palm Beach Gardens
(850) 488-0322
Rep. Fred Brummer
R-Apopka
(850) 488-2023

3 OPTIONS ON TABLE

Mike Ferlita bought his Seminole Heights home for $63,000 in 2000 and he pays about $600 in property taxes under existing caps. Now he wants to move to a bigger place. His home appraises at $235,000. But he can't afford to move to a bigger house because his taxes on a $235,000 home would be about $5,000. Here's how three proposals would affect him:

Proposal 1: He buys a $235,000 home anywhere in Florida, and is taxed at his former rate for a $63,000 home.

Proposal 2: He keeps the $63,000 rate if he buys another home only in Hillsborough County and the county accepts such deals.

Proposal 3: Only those over age 62 get to take their existing tax rates to new homes. Ferlita buys a $235,000 house but is taxed at a higher rate.

It appears to me that Homebuyers, Home Inspectors, Home Builders & Realtors could come together on this legislation, over the next few years we could use this issue as a platform to build lasting strong relationships with other associations and groups. I hope the NACHI legislation committee will look into actively supporting this bill and use it as a way to promote our association and to open up lines of communication among other groups.

[rglenn]

I sat in an Investors meeting last week. Those guys were ready to storm Tallahassee. You struggle to get insurance because the rates are high and climbing. You can't afford to sell your house because the difference in taxes we pay now and the taxes you will pay are astronomical. You can't buy a house because the increases in taxes increase your payments by $100 and up. It's worse than buying a house with an adjustable mortgage. Investors can't buy property because the taxes are too high and the renters can't afford to pick up the slack. Meanwhile......just where in the hell are 900 people a day moving into the State going to live ? 80 people a day moving into the Tampa Bay area. They better fix this fast or this real estate market is going to flat out crash in Florida.

[Joseph Burkeson, CMI]

Originally Posted by rglenn

I sat in an Investors meeting last week. Those guys were ready to storm Tallahassee. You struggle to get insurance because the rates are high and climbing. You can't afford to sell your house because the difference in taxes we pay now and the taxes you will pay are astronomical. You can't buy a house because the increases in taxes increase your payments by $100 and up. It's worse than buying a house with an adjustable mortgage. Investors can't buy property because the taxes are too high and the renters can't afford to pick up the slack. Meanwhile......just where in the hell are 900 people a day moving into the State going to live ? 80 people a day moving into the Tampa Bay area. They better fix this fast or this real estate market is going to flat out crash in Florida.

This will/should have no effect on investors whatsoever, this bill is only concerned with current existing full-time Florida residents who are eligible for the real estate homestead tax exemption on their personal residence.

In theory it would allow residents to carry their current exemption over to a new property. As an example, 5-years ago a house was purchased for $150K, and over that 5-years it appreciated to $300K. If the house was sold at $300K and another purchased for $300K in the same year the taxes would stay the same if the residents remain eligible for the homestead program.

Currently real estate taxes on houses that are eligible for the homestead exemption can only rise 3% regardless of the assessed value. This bill would allow those eligible to transact into a comparable home without seeing a 100% increase in the real estate tax they are now currently paying.