Now that the special session on property insurance is complete, and the bill has been signed, the Legislature will move on to other subjects.
One of the biggest issues raised during the campaign last year is property taxes.
This is a complicated issue, which means this post could get lengthy. However, I will endeavor to boil down the complicated facets for you, my loyal readers.
Let’s start by realizing that property taxes are the product of the tax rate (millage) and the property value. Now, I am over simplifying this, but the formula is basically:
Property Value x Tax Rate = Property Taxes
The property value is determined by the elected county Property Appraiser. The Tax Rate is set, generally, by local governing boards (omitting, for this post, things like the Children’s Board, Port Authority, etc).
Now, in 1992, Floridians passed the Save Our Homes amendment. This said that the assessed value of a homestead property (i.e. a property for which a homestead exemption had been filed) could not increase by more than the lesser of 3% or the Consumer Price Index. In the 14 years since the amendment passed, the CPI was 3% or higher only 5 times — so homestead owners who kept their home, have received a tremendous amount of savings.
There are two problems. First, the cap only applies if you keep your home. When you buy a new home, the assessed value is re-determined. The previous owners’ cap does not apply to the new owner. This could lead to tremendous increases in the tax collected on that property, because of the previously undervalued assessment created by the amendment. This oftean means that people can’t sell their homes and move to a new one, because they can’t afford the higher property taxes at their new house.
The second problem is, that since that time – especially over the past few years – the real estate market has seen often double digit increases in the values of property. Non-homestead property (rental properties, commerical properties, and second homes) have not had the benefit of the cap.
So the Legislature has been asked to help.
There are at least 28 bills filed that deal with this subject, 12 in the House and 16 in the Senate, as of this posting. Let’s look at these:
A significant proposal has been to allow homeowners to have some protection when they move from one homestead property to another. To do this, the Florida Constitution must be amended.
- HJR 23 – Rep. Carl Domino (R-Juno Beach) – This bill will allow the Legislature to provide a process in general law that allows for undervaluation of a new homestead property purchased within one year of selling a previous homestead property.
- HJR 459 – Rep. Marcelo Llorente (R-Miami) – This complicated bill allows the cap to apply to a new homestead purchased within two years and in the same county. (Value of new home can’t be less than of the old home, new home can’t be more than 110% larger than the old home, and the homeowner can not have already benefitted from this portability previously – you can only move once. I said it was complicated.)
- HJR 551 – Rep. Robert Schenck (R-Spring Hill) – Another complicated bill to allow the cap to apply to new homestead property purchased because the old home was taken through eminent domain processes. (New home must be equal or greater than old home, and difference between just value and assessed value of new home must be less than the difference between just value and assessed value of old home.) [Similar to SJR 688 - Sen. Steven Geller (D-Hallandale Beach).]
Non-Homestead PropertyAs noted, annual increases in the assessments of non-homestead properties are not subject to the Save Our Homes cap.
- HJR 75 – Rep. Bob Allen (R-Merritt Island) – This bill would provide the homestead property caps to non-homestead properties and provide circumstances under which the assessments could be increased, based on market data. [Comparable to SJR 378 by Sen. Mike Fasno (R-New Port Richey) and to SJR 888 - Sen. Bill Posey (R-Rockledge).]
- SJR 652 – Sen. Carey Baker (R-Eustis) – This would provide a cap for non-homestead properties.
- SB 890 – Sen. Bill Posey (R-Rockledge) – This bill implements the cap for non-homestead properties as contained in SJR 888, if the amendment passes.
Just ValuationCurrent law says that, in determining the proper value for a piece of property, the assessment must be based on the highest and best use of the property.
- HB 163 – Rep. Tom Anderson (R-Holiday) – This bill would remove the “highest and best use” terminology from the determination of just value. [Identical to SB 508 - Sen. Mike Fasno (R-New Port Richey).]
- HB 261 – Rep. Carlos Lopez-Cantera (R-Miami) – In addition to removing “highest and best use” terminology from the determination of just value, it requires property appraisers to use only income from income-producing property. [Identical to SB 722 - Sen. Jeff Atwater (R-Palm Beach).]
- HB 473 – Rep. Robert Schenck (R-Spring Hill) – This bill would create another way to find the just value: the average of the purchase price of the property (less any amount paid for furnishings or other personal property), the assessed value of a comparable home that was capped for at least five years, and the assessed value of a comparable home that was capped for at least ten years. [Similar to SB 852 - Sen. Sen. Mike Fasno (R-New Port Richey).]
Limit Government Revenue
In a slightly backwards way, some legislators and Governor Crist are suggesting that local governments need to reduce the total amount of money they collect. These bills would reduce individual property taxes by requiring the local governments to reduce their millage rate.
- HB 193 – Rep. Stan Mayfield (R-Vero Beach) – This bill will limit increases in local government revenue to the percent increase in county population plus the increase in the Consumer Price Index.
- HB 363 – Rep. Janet Long (D-St. Petersburg) – This bill will limit increases in local government revenue to twice the increase in the Consumer Price Index.
- HB 503 – Rep. Joyce Cusack (D-Deland) – This bill would prohibit local governments from recieving local options sales taxes (Community Investment Tax, Penny for Pinellas, etc) if that government does not reduce its millage rate to an already defined “roll back rate.” [Identical to SB 220 - Sen. Evelyn Lynn (R-Ormond Beach).]
- HB 501 – Rep. Joyce Cusack (D-Deland) – This bill says that additions that help strengthen a home’s resistance to hurricanes do not increase its assessed value. [Similar to SB 158 - Sen. Steven Geller (D-Hallandale Beach)]
- HJR 571 – Rep. Marcelo Llorente (R-Miami) – This proposes an amendment to the Constitution to double the homestead exemption from $25,000 to $50,000. [Comparable to SJR 452 - Sen. Mandy Dawson (D-Ft. Lauderdale).]
- SB 454 – Sen. Mandy Dawson (D-Ft. Lauderdale) – This bill implements the doubling of the homestead exemption, if the amendment is passed.
- SJR 534 – Sen. Mike Bennett (R-Bradenton) – This complicated measure allows for portability of the homestead cap within the same county and within one year of selling a homestead property (provided the difference between the just value and assessed value of the new property is less than the difference for the old property, and the assessed value of the new home is the same or greater than the old home); doubles the homestead exemption from $25,000 to $50,000; says that the first $25,000 in value is taxable while the value from $25,001 to $75,000 is exempt; and provides for a 5% cap on inreases to the assessed value of non-homestead property. These measures must be passed by the voters of a county or the county commission.
- SJR 694 – Sen. Burt Saunders (R-Naples) – This provides a detailed mechanism to assess a newly puchased homestead property.
- Sen. Rudy Garcia (R-Miami) filed three “shell bills” which may or may not be amended to include specific language: SB 786, SB 788, and SB 790.
These are only the first bills. More will be filed by members, and you can expect House and Senate committees to work on this issue as well. I will be following this issue, as will others in the blogosphere and mainstream media .