SAVE OUR HOMES! - Florida Tax Reform

By
Real Estate Agent with Joe Manausa Real Estate 8508880888

At a recent Marketing Meeting at the Tallahassee Board of Realtors, a presentation was presented by a FAR representative regarding the Florida Tax Reform. This amendment will be voted upon by the residents of Florida in the State wide election on 29 January 2008. Attached is that presentation for your use (Thanks to Don Pickett for passing this along).

Tallahassee Real Estate

The problem...

  • People are locked in their homes
  • A special election to get reform sooner rather than later
  • We did not support a simple doubling of the Homestead Exemption
  • Huge problems with highest and best use
  • Taxes should have been rolled back for significant Savings

High Expectations!

  • The Governor kept saying property taxes would "drop like a rock."
  • The House Speaker floated the idea of increasing sales tax to buy-out property
  • taxes on Homestead property.

We deserve to have high expectations from our elected officials because total property tax levies have increased by 99% between Fiscal Years 2000 and 2007

We didn't get to where we are overnight!

The property tax system evolved and in most cases there were good intentions

Save Our Homes

  • Few in this room probably supported Save Our Homes at the time it passed in 1992, but it had what voters believed was a valid purpose at the time.
  • Save Our Homes created huge inequities among taxpayers.
  • One house next door to another pays very different property taxes.
  • Because of Save Our Homes, local taxing authorities have increased the burden on non-homestead properties to compensate for the homestead savings.
  • "The three problems with real estate in Florida are property taxes, property insurance and negative publicity." (Nancy Riley 2007 FAR President)

Don't believe everything you read in the newspaper!!!

  • I'm m not here to tell you what passed the legislature is something I would have written if I were writing the perfect bill.
  • But, I do want to tell you that it is MUCH better than current law.

The Legislature passed three bills...

  1. Statutory Rollbacks which are immediate and already signed by the Governor
  2. Constitutional Amendment that creates a Super Homestead Exemption and a few other items
  3. Special Election

Phase One

  • Statutory millage rollback
  • Local government revenue cap
  • For the upcoming 2007-08 fiscal year that begins October 1, 2007:
  • All local governments (except school boards) will have to reduce total property tax revenues by a specified percentage (0-9%) based on their 5-year history of levies.
  • Independent special taxing districts that levy ad valorem taxes are all subject to a 3 percent cut.

Revenue Cap

  • Instead of an assessment cap (such as Save Our Homes), there is an overall revenue cap limiting what governments can collect from property taxes.
  • This will protect everyone, including commercial and rental housing, from big and unpredictable property tax increases from year-to-year.

Assessment Cap versus Revenue Cap

  • SOH is an assessment cap on Homestead properties only. It reduces the taxable value but it does not limit the tax rate.
  • Local gov'ts have had to keep millage rates artificially high to compensate for the taxable value that is shielded by Save Our Homes.
  • The phenomenon especially hurts commercial and non-homestead properties who have no assessment limitations.

Revenue Cap (Continued)

  • The revenue cap requires a local government to collect the same amount of revenue it did in the previous year (adjusted for new construction and statewide personal income growth)
  • A revenue cap offers guaranteed protections for individual properties, much like an assessment cap. However, every property in the jurisdiction will benefit from a revenue cap, rather than only Homesteads.
  • The millage rate applies equally to all properties and the revenue cap will continually push the millage rate down. This is good for every class of property.
  • This would be the first ever guaranteed property tax protection for commercial and
  • non-homestead properties in Florida's history!

Phase One

The statutory rollback equals $15.6 billion in tax relief over five years

Phase Two

  • Proposed amendment to Florida's constitution
  • If passed, the amendment will offer voters a choice of continuing their Save Our Homes protection if they have homesteaded property, or choosing a super- homestead exemption.

Super-Homestead Exemption

  • 75% of the first $200,000 of a home's value and 15% of the next $300,000
  • Every homestead receives at least a $50,000 exemption
  • The maximum homestead exemption would be $195,000
  • Benefits workforce community such as police, firefighters, nurses and teachers
  • Median price of an existing home in Florida was $237,000 in May 2007
  • Under Save Our Homes, the homestead exemption will be $25,000
  • Under the super homestead exemption, a homeowner will receive $155,550 in exemption
  • The upper threshold of $500,000 is indexed to personal income, so it will increase at about 4% a year
  • The amendment also allows the Legislature to increase the upper threshold limit with a 2/3 vote
  • First time homebuyers and people who move will be afforded substantially bigger savings - up to $195,000 in exemptions, compared to the only $25,000 that they receive now
  • This new plan also assures most people that they won't be hit with a tax bill many times what they pay now on their next home purchase.
  • If approved, current homesteaders will be given a choice of how they want to be taxed.
  • You can choose to stay with Save Our Homes or adopt the new Super Homestead system
  • There is no deadline for the choice, but it can only be made for your current homestead.
  • Transferring a homestead or moving will put that owner in the new super-homestead exemption system.
  • $25,000 tangible personal property tax exemption for businesses
  • This local tax is paid by businesses on shelving, office equipment, and other materials.
  • 1 million of Florida's 1.3 million businesses will be completely exempt from this tax - and many of those will be REALTORS┬«. While the annual dollar savings average $500 per year, the exemption eliminates the annual filing requirement for those exempt.

Additional Changes:

  • Further protects low-income seniors
  • Expressly authorizes the legislature to limit the authority of local governments to increase property taxes
  • Authorizes the Legislature to help working waterfronts and affordable housing with assessment changes

Phase Three

  • A special election for constitutional changes is called for January 29, 2008.
  • Delaying consideration of these reforms until November 2008 would have forced a delay of implementation of the new super-homestead exemption by another year.
  • This would mean more people would be locked in their homes and for another year!

What's Next?

  • FAR has received assurances that assessment methods for commercial and other property types will also be addressed in the next regular session of the legislature.
  • Most importantly among these is Highest and Best Use.

Tax and Budget Reform Commission

  • Tax and Budget Reform Commission which is appointed to meet every 20 years has been named recently and our president is one of those appointments.
  • The Commission will continue to meet for the next several months and will be able to put amendments directly on the November 2008 ballot.

UPDATE 8/6/07

I received the following information, forwarded by Ed Cohn, from the office of Representative Carl J. Domino:

Screen Shot 1 Tallahassee Real Estate

Screen Shot 2 Tallahassee Real Estate

Screen Shot 3 Tallahassee Real Estate

This is obviously a very HOT topic.

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Anonymous
Anonymous
Personally I think anyone who wants this referendum is nuts.  No one can tell us 5 years out which would be more financially beneficial, SOH or super exemption.  I'd rather have a 3% cap on my taxes, than leave it up to the gods to be.  So while FAR is organizing a get out the YES vote, I, as a homeowner in Florida will be organizing a get out the NO vote.
Aug 06, 2007 02:14 PM #6
Rainmaker
806,328
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate
Terry, don't you think the statuatory roll-back will be beneficial?
Aug 06, 2007 02:48 PM #7
Rainmaker
806,328
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate
Ed Cohn sent the "update" now featured at the bottom of the original posting. Thanks Ed.
Aug 06, 2007 04:22 PM #8
Anonymous
Anonymous
Statutory roll back?  What roll back Joe?  Here in Brevard the average estimated savings will be $174 a year.  Big woop!  FAR is for the referendum because it will motivate people to buy homes pure and simple, without regard to the long term outlook on property taxes.  SOH is safe, the super exemption is not.  For example, with the super exemption we are at the mercy of the property appraiser.  As our home appraise higher we get closer and closer to the max on the exemption.  SOH keeps that appraisal in check by allowing only a 3% increase in taxes.  As far as I can see FAR is for this referendum because it will put money in their pockets by increased home sales.  After that I can't see they would care how the property tax issue will affect homeowners.  As I said before, vote NO on the referendum.
Aug 08, 2007 10:03 AM #9
Rainmaker
806,328
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate
I can't imagine how the rollback would only be worth $174 in Brevard County. The revenue cap would finally force (wouldn't it?) counties to start lowering millage rates (ours haven't moved down, yet values have doubled in the last 6 years).
Aug 08, 2007 02:12 PM #10
Anonymous
Anonymous
Well Joe, they are rolling the taxes back to 06, which interestingly enough happens to be the year we are currently paying property tax on.  So I say, what roll back?  A roll back to me would mean, like back a few years, not back to the current year.  And the $174 is a high estimate, given by the board of commissioners here.  Lets face it, Tallahassee has thrown us a carrot, just to shut us up.  If the referendum passes they can say "look what a great job we did for you", if it fails they can blame us for not passing it.  Insurance reform would go much farther in giving us some relief.  Oh sorry, can't do that because the insurance industry gave the republican party in excess of 5 million dollars for their campaigns in 06.  Wouldn't want to step on those toes.  Instead, because of property tax cuts, and county budget cuts little people will lose their county jobs.  Like ME!  My job will be desolved as of Sept 30, and all for a crummy $174 in property tax cut.
Aug 08, 2007 02:27 PM #11
Rainmaker
123,402
Tchaka Owen
Keller Williams Realty - Hollywood, FL

Joe, I like that FAR has given a presentation and I sincerely thank you for providing it to us in an easy to read blog format.  And while it may be better than what we have right now, I have to back Terry - I will vote NO and will volunteer my time to get the NO vote out.  He's right on about 2006 taxes - that doesn't do a damn thing for me. I bought last summer so I've already factored my taxes to be super high.

I recall funding cuts for schools and services such as police, firefighters, nurses and the like.  I can't stand behind that.  Schools already suck in Florida, I'd rather pay higher taxes knowing that the next generation is being taken card of educationally.

Who knows, maybe there will be amendments forthcoming that satisfy a number of our concerns.

 

Aug 08, 2007 08:48 PM #12
Anonymous
Anonymous
I noticed in our tax records they now have a link to the new "super exemption calculator"
Aug 08, 2007 09:19 PM #13
Rainmaker
806,328
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate
Tchaka, I thought the rollback was based upon three years. I guess I need to study this more, thanks for the input.
Aug 09, 2007 04:00 AM #14
Anonymous
Anonymous
Joe, I recall the talk being 3 or 4 years too.  But it seems that the final number (at least for now) came to 2006.
Aug 09, 2007 08:09 AM #15
Rainmaker
123,402
Tchaka Owen
Keller Williams Realty - Hollywood, FL
Ooops, that was me......wasn't signed in.
Aug 09, 2007 08:15 AM #16
Rainmaker
806,328
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate
Tchaka, thanks. I'm going to try to figure this out tonight.
Aug 09, 2007 08:16 AM #17
Rainmaker
266,754
Jay Beckingham
Premier Nationwide Lending - Port St Lucie, FL
"I love first time homebuyers"

glad i revisited. the update. i believe this bill should pass, but certainly not be the end of tax reform.

rep domino says that if the bill fails perhaps the legislators will allow all the ideas to be debated.

dear sir from a registered voter-THAT'S YOUR JOB!-if the legislators don't debate further reforms (let me get my new hampshire up for a minute). then

throw the gentleman (bums) and ladies out! 

i'm sorry (maybe) i mean vote them out. 

Aug 09, 2007 03:02 PM #18
Rainmaker
806,328
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate
I know what you mean Jay. I'm still confused on the roll-back and how that is going to work. Is it just to post-boom 2006?
Aug 09, 2007 03:15 PM #19
Anonymous
14 year homeowner

This seems to be a mere shell game.

I wish I could find the article so that could post the URL and also be absolutely certain of the numbers...but...the city of Hollywood reported something like a 15 million dollar windfall in property tax revenue for FY 06.  The Sun-Sentinel, in a small corner note, page 30 tiny comment, noted that the city had raised the budget for the next FY by...you guessed it...the exact same amount.  Fiscal responsibility by local government is a joke and everyone knows it.

That said, I've owned my home for 14 years.  Yes, the new neighbor next door who bought the same type home pays more in taxes than I do because SOH locked my rates all those years ago and hers is based upon a value determined at the sale 5 years ago.  But I don't "feel" that I am the one harming my neighbor.  The problem is with overspending by the city/county/state and basing their budgets upon inflated property values, then locking themselves into being spoiled by the revenue.  So what?  Now we all have to listen to the "what about the public school's funding" dirge?  That dog don't hunt!  It costs more per pupil to educate a child in public school that in private school and the education received is a disaster!  No sympathy from me on that one.

I am completely against property taxes, as I've paid for my house and now I pay rent to the city in the form of "property tax".  But, IF, and that's a big IF...there should be a property tax at all, it should be based upon the square footage of land that is owned.  Not upon the value of the property.  This is a revenue scheme and has been since it's inception.  The question is what does the value of our homes have to do with the amount it costs to run a city/county/state?  Nothing whatsoever.  Granted there is an inflationary COL that would need adjustment to the rate, but that is it.  But to suggest that when one sector of the US market increases or decreases in value that this should be the determining factor in municipal budgets is outrageous.  Ultimately, I would much rather that municipalities receive their revenue in the form of a sales tax, not in a property tax.

I will vote "no" regarding this new and allegedly improved tax...er...rental scheme.  Now, I KNOW what I will pay next year in taxes.  take my protection away and what...I'm supposed to believe the politicians that my taxes are going to stay low?  I think not.  I've learned not to trust government.  And this deal stinks.

Aug 13, 2007 10:55 AM #20
Rainmaker
123,402
Tchaka Owen
Keller Williams Realty - Hollywood, FL
Hey, I like the new Arts Park and Broadwalk!!!
Aug 13, 2007 11:11 AM #21
Rainmaker
806,328
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate
interesting points. 14 Year homeowner.
Aug 13, 2007 01:37 PM #22
Anonymous
Ant

AHH.....I just recieved my proposed tax bill in Flagler County and I have two points.

ONE. Please realtors and investors , stop whining about overhaul from SOH > If your theory was true then Real Estate in Manhattan would be dead.

TWO....No suprise my tax bill goes UP! on a modest home valued by town around 160,000 because despite the roll back they are increasing school taxs and other fees much more than they ever have before......obviously already trying to make up for phantom lost taxation.

SOH is very fair, the only problem is portability. Why should someone who has paid into taxs for ten, twenty ,forty years, the government has made plenty of interest off of and whos kids are no longer in school be penalized. SHAME ON YOU INVESTORS.

 

Aug 23, 2007 08:21 PM #23
Rainmaker
123,402
Tchaka Owen
Keller Williams Realty - Hollywood, FL
Don't be scared to log in before posting.  No one will bite your head off...all (well most) opinions are respected.
Aug 23, 2007 08:48 PM #24
Rainmaker
806,328
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate
Still a lot of strong response on this issue. No need to be anonomous Ant, we are all concerned about increases. As far as passing the "Shame," I wonder why the different taxing authorities need so much more money than they did just six years ago.....
Aug 24, 2007 04:26 AM #25
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