Sunday, October 21, 2007
Dear Florida Realtors:For over a year now you have been advocating for property tax reform that is comprehensive and not just a simple tax cut. Your message has been clearly delivered to the legislature that reform needs to address all property types - not just Homestead property owners.
This afternoon The Florida House of Representatives released a revised property tax relief proposal that will be considered on Monday. This plan includes provisions advocated by both Republicans and Democrats in the House.
In addition to Portability which is being embraced by the Governor, Senate and House, this new House proposal includes a five percent assessment cap on Commercial and non-homestead property. This is intended to provide the predictability and stability that non-homestead property owners have been advocating for. The House is also advocating a new homestead exemption that, instead of doubling the current $25,000 exemption, would guarantee a minimum Save Our Homes exemption of 40% of the county median home value. House leaders believe this will provide relief to not only new buyers but those who have purchased in recent years.
Again, we expect the House to begin consideration of this proposal on Monday. Both the House and Senate plans that are being considered maintain the current Save Our Homes structure and provide for portability of Save Our Homes.
Attached is a side-by-side that gives more detail on the current Senate and House proposals.
Here is a complete list of the issues being proposed in the House plan today:
Instead of doubling the homestead exemption, this exemption is tied to the county's median home value and will target relief to all homestead property owners (not just first time buyers). Again, the exemption would be 40% of area median.
Save Our Homes-like cap on non-homestead and commercial property to help restore fairness, equity and predictability to our property tax system by capping any increase at 5%. This will help businesses who have faced outrageous tax increases and owners of second homes (Snowbirds).
Portability - homeowners may transfer their Save Our Homes benefits to a new homestead anywhere in Florida within 2 years of leaving their former homestead.
Creates a new Tangible Personal Property Exemption of $25,000
Limits the authority of local governments to increase property taxes
Provides for limitations on assessed values of properties used for affordable housing
Provides an assessment growth limitation for all non-homestead properties in Florida by 5%
Creates more flexibility for the Legislature to limit assessments for working waterfront properties
Election of all county property appraisers
We will continue to update you on negotiations.
2007 FAR President
PROPERTY TAX RELIEF PROPOSALS-SPECIAL SESSION D
Provides for statewide portability of Save Our Homes differential. Can "port" full amount if "upsizing" but pro-rata share if "downsizing". $1 million cap on amount to be ported. Not applicable to school taxes.
Federal constitutional right to travel issues still of concern, although ameliorated by Senate's new first-time homebuyer exemption and House's 40% of median home price exemption.
Retroactive to provide relief to those moving in 2007.
Double the exemption from $25,000 to $50,000. Apply to third $25,000 (i.e., exempt $1-25,000; tax $25,000 to $50,000; exempt $50,000 to $75,000). Not applicable to school taxes.
Provide new homestead exemption equal to 40% of median just value of homestead property in county. Exemption applies after first $50,000 of just value of homestead. Homeowner gets only larger benefit of new 40% exemption or SOH differential. Not applicable to school taxes.
Most costly component of Senate package ($3.5 billion over 5 years) that provides relief to many high-end homeowners who already enjoy significant SOH savings. Applying to third $25,000 will provide some relief for poorer, rural counties. No indexing.
House proposal would better target tax relief to homeowners in need and either have less fiscal impact on government or result in less redistribution of tax burden onto non-homestead properties.
Additional homestead exemption for persons buying first home in state. Amount is 25% of median value of home in the county. Not applicable to school taxes.
New homestead of 40% of median homestead just value in county applies instead.
Both Senate and House proposals apply to first-time homesteaders in Florida, regardless of whether owned home elsewhere.
Save Our Homes cap of lesser or 3% or CPI maintained for homestead property.
Non-Homestead Assessment Limit
Limits annual increase in assessments on non-homestead real property at 5%. Non-homestead residential properties of 9 units or less reset upon sale; assessment cap remains with property for all other non-homestead real property.
Additions to property assessed as provided by general law.
Will limit increases in assessments in single year to rate more in line with long-term historical growth rates, and increase predictability of taxes. Will help limit redistribution of tax burden onto non-homestead property.
Tangible Personal Property Exemption
Exempts tangible personal property at $25,000 per person per county.
No indexing. Maximum exemption set in constitution is $25,000.
Property Tax Cap
Statutory caps adopted in prior special session remain in place. Additionally, new cap prevents property tax rates in 2008-09 from automatically increasing to offset tax base reductions.
Local governments cannot increase rates to offset base reductions without an extraordinary voter: 2/3 vote to restore 2/3 of taxes lost to base reductions; unanimous vote to restore more than 2/3.
Authorizes assessment of government rent-restricted affordable housing based upon actual rents rather than highest and best use of property. Not applicable to school taxes.
Detailed implementing legislation proposed.
Authorizes application of special assessment rules to property used exclusively for commercial fishing or property open to the public and used predominantly for water-dependent purposes or public access to the water. Not applicable to school taxes.
Implementing legislation would await regular session.
$100,000 property tax exemption for low income seniors. Applies to those 65 or older with household income of $23,604 or less. Indexed for inflation. Applies to school taxes.
Additional homestead exemption equal to 100% of the median just value of homestead property in the county. Indexed to inflation.
Concerns have been expressed by Senators regarding the value of $100,000 exemption in South Florida versus rest of state.
Local Revenue Cap
Included in Governor's proposal, but not in legislative proposals.
Replacement of Property Taxes
Buy-down language doesn't guarantee that sales tax dollars will not just become cumulative. There is no mechanism in legislation to benchmark school millage and adjust it according to sales tax revenues. Start date and existing contract issues would need to be addressed.
Tax base reductions apply. Tax caps apply.
Amendments to protect special districts providing fire, ems, and hospital services were either withdrawn or failed. Amendment to cap special assessments at 5% was withdrawn in Senate.
Presumption of Correctness/Burden of Proof
Property appraiser would lose the presumption of correctness for those non-homestead parcels where the increase in value exceeds the average increase for other properties within the county in the same category of property.
Version in Senate bill is not ideal. Categories are defined by law and manufacturing, electric, telecom, cable, and other tangible personal property would be excluded from benefits of level playing field. This is a statutory provision. Atwater floor amendment (#831234--withdrawn) contained preferred language.
Elected Property Appraiser
Requires all property appraisers be popularly-elected.
Miami-Dade County is only one county with appointed property appraiser.
Compiled: October 19, 2007, by Vicki Weber, Hopping Green & Sams, P.A.
Sunday, August 26, 2007
There are also great quotes in the article from noted economists who had proclaimed just a few years ago that the housing market could never be prone to a national setback because it is too localized and there is not national market for housing.
On the whole, do you think this is a good thing or a bad thing for us? The bad, obviously, is that it is an indicator that the housing slump is more measurable than ever. The good could be that with prices actually coming down we may get some buyers ready to step in the buy up the value priced homes.
Thursday, July 5, 2007
The article misses the increases in bonuses and sales commission to Realtors. Locally, we've seen a change from some builders refusing to pay co-broke commission at all to offers of 8% and even 10% co-broke. That in addition to enticements as strong as a brand new gold Rolex watch.
However, I don't agree that this shift is necessarily a sign that the housing market is worse than previously predicted. I just think that it is indicative of a market that needs promotion. The market has slowed and these incentives are simply another sign of that change.
What do you think?
Business - newsjournalonline.com
Wednesday, June 27, 2007
SAVE OUR HOMES (SOH) PORTABILITY UPDATE! I was gratified to read in today's news, that Carlos Lacasa, who sits on the State Taxation and Budget Control Committee, believes that my SOH Portability concept should be placed on the November 2007 ballot. A citizens initiative to put portability on that ballot (although with limits, which are too low for expensive homes,) is gathering signatures. With news headlines stating: that home prices have suffered their biggest drop in 16 years, that prices are declining and inventories are very high, that sub-prime markets are in disarray, that interest rates are rising, it is obvious that the residential market needs relief which only SOH Portability can provide. I feel that on January 29th, 2008, primary ballot, the Constitutional Amendment will most likely fail, since it will hurt the market by taking away the Save Our Homes protection. However, I will continue to pursue initiatives to bring true tax relief for homeowners of our area and our state. Once again, I will file my Portability Bill and, if the Governor calls for another special session, advocate that he includes portability. I will be happy to speak at any association meetings, and explain, in depth, the concept of my Portability Bill. Please contact my district office at (561) 625-5176, to schedule a date. Carl J. Domino
Tuesday, June 26, 2007
In the State of Florida most municipalities derive most or all of their income from property taxes. Property taxes in the State are determined based on a percentage (millage rate) of the total property value. Each taxing district establishes a millage rate. Taxing districts range by area but typically include the County, City, hospital, and schools as the major expenses. Other taxing districts may include water management, inland navigation, mosquito control, etc.
While the taxing districts are determining their millage rate, the County’s Property Appraiser is determining the value of every single property in the County. The Property Appraiser uses recent sales data and sets a value as of January 1st. He or she then combines all of the millage rates appropriate for each property, calculates any tax exemptions, and sends out a Truth in Millage statement, or TRIM notice, to each property owner. That statement informs each property owner of their new taxes in advance of the actual bill.
When property owners receive their TRIM notices, they have several actions that they can take to dispute the taxes. First, they can petition their City, County, and other taxing authorities to lower their taxes. Of course the City or County Commissioners and other elected officials will try to find a happy medium by determining a budget with which they can run their municipality while also satisfying the voters.
Some property owners may disagree with the Property Appraiser’s assessment of their value rather than, or in addition to, the millage rates. These people have the right to appeal to the Property Appraiser and eventually may be able to appeal to a court of law.
Ultimately, each property owner will receive a bill for the appropriate taxes and the process allows our governments to continue with each person paying a fair share. Over the years, however, a number of exemptions have been created in order to provide benefits to certain individuals and organizations.
Several properties are entirely exempt from property tax. It wouldn’t make much sense, for example, to tax hospitals, parks, and schools who derive all or a portion of their revenue from the taxes themselves. Likewise, there are facilities that are offered reduced taxes on an incentive basis. It may be in the best interest of a municipality to defer or exempt taxes on property in order to entice a company to expand or move to the area. It may also be in the best interest of the municipality to offer tax incentives for preservation of historic properties. These exemptions are removed from the tax roll and the costs that they would normally pay are distributed to all other properties on a fair share basis.
Florida also seeks to protect each homeowner’s primary home using a technique known as a homestead. Each landowner can claim a homestead on one piece of property which must be their primary dwelling. In an effort to help homeowners, the State provides an exemption of $25,000 on that homesteaded property. In addition, there are other exemptions available for widows, veterans, and other specially designated individuals. This homestead exemption is an advantage that a property owner has on their primary dwelling that is not extended to non-homesteaded properties (commercial, investment/rental, and industrial property for example).
In the mid 1990’s however, the $25,000 exemption seemed to be insufficient to protect homeowners as properties continued to rise in value. Each year, as property values increased, property taxes increased in the same fashion. If your property value doubled, for example, your property taxes would double (with the exception of the $25,000 exemption). In response to the concern that some people were being “taxed out of their homes” by the rising expense, a new amendment to the Florida Constitution was proposed and passed. This new amendment, number 10, is called the “Save Our Homes Amendment” and provides an ongoing and growing benefit. Under the new rules, each year the property appraiser determines the value of each property. For homesteaded property, however, he will also calculate the previous year’s property value and add the value of the consumer price index (CPI), or 3% if the CPI is more than 3%. He will examine both of the prices and uses the lower of the two. That calculation will keep homesteaded properties from increasing in price for purposes of tax calculations.
Problems with Save Our Homes
Let’s look at an example:
For purposes of discussion, this table assumes that property prices increased by 10% per year each year from 1995 until 2006. Realistically, there were some years at 5% price increases and a few with 30% price increases. Further, the example assumes that the millage rate is 20 mills and remains consistent the entire time.
You’ll notice that both properties start at a value of $100,000. Initially, the homesteaded property has an advantage of $25,000 in savings due to the Florida homestead exemption. Next you’ll notice that as the value increases the homesteaded property does not move substantially while the non-homesteaded property increases dramatically. Imagine the effect the last column would have on a renter. The cost would increase from $167/month of the rent check going to taxes to $476/month! That is a very difficult pill for the renter to swallow.
For another example, consider a one million dollar commercial property in the same situation. The non-homesteaded property would increase in value from $20,000 annually to $57,060. The difference of $27,060 is roughly the same as the average wage in many parts of Florida. Consider the impact on economic development and business recruitment when telling an industrial business owner who is considering multiple states that a choice in Florida will dramatically increase their taxes on corporate property and that their employees will have higher rents to pay.
Another situation to consider is someone who is living in a home that they have been in for some time. At some point, whether a home owner wants to upgrade to a larger home or move into something smaller, the tax difference must be taken into account. There are some people who can not afford to move because of the difference in cost. The “Save Our Homes” amendment was designed to protect people from having to sell their homes. Unfortunately, it had the unintended consequences of keeping people locked into their homes.
These points become substantially more important when you consider that in Volusia County Florida, an astounding 96% of the increases in taxes from 2006 to 2007 were borne by non-homesteaded property owners.
The New Solution
Recently the Florida legislature passed a new Constitutional amendment that will be put forth to the voters in January. The new amendment, if approved by 60% of the voters, will repeal the “Save Our Homes” amendment and eliminate the current $25,000 homestead exemption and replace it with an entirely new system.
Under the new system, there is a 75% exemption on the first $200,000 of home value and a 15% exemption on the next $300,000. Under both the current homestead exemption and the new plan, the lower price homes receive a higher benefit that higher priced homes. However, the repeal of the Save Our Homes amendment means that the long term benefits of the tax cap will be phased out. Fortunately for the people who are currently protected by the Save Our Homes amendment, the benefit will only be lost when the property owner elects to change to the new benefit system, sells their home, or dies.
Let’s look at the impact compared to the standard homestead exemption:
The chart above represents a comparison of the homestead solution that is currently in place vs. the new system that has been proposed. Clearly, the new solution offers a higher level of exemption at every level but in particular, it helps the people at the lowest level. The chart above, however, doesn’t consider the impact of the SOH amendment.
The chart above uses the same basic assumptions as we examined in the SOH review. We assume a 10% annual return for over 10 years with no moves. The advantages to the tax payer under the SOH system are dramatic. Of course, the cost to renters or businesses would be the same under both systems and can be determined by looking at the column “2006 Value”, there are no exemptions for most rental and commercial properties. Importantly, property that is currently protected by the SOH amendment, will not be forced to change unless they move to a new home.
Effect on non-homesteaded property
The new amendment has no direct impact on non-homesteaded property. There is no exemption for non-homesteaded property and there is no direct benefit. However, there is a dramatic indirect effect. The fact that properties will not have a fixed cap but will fluctuate with the property values means that as property grows, the non-homesteaded property will be effected at a similar proportion to the homesteaded property. While the two will not be directly in line, it will be less stressful on the non-homesteaded property than the current solution.
Ultimately, the solution that has been proposed is not the ultimate solution. A better solution would be a more aggressive change from the current solution to something similar to the new option. However, a more aggressive change would be very difficult to overcome at the polls. Homeowners and voters should remember that any solution which dramatically reduces taxes will have to generate them somewhere and we must determine the source of those new taxes and ensure that we are not harming ourselves in other ways.
The solution that has been suggested is strong enough that it should be accepted. Because it grandfathers current taxpayers, it hurts no one and can only serve to better people’s position in the mid term. In the long run, it will phase us back into a solution that provides an equilibrium between homesteaded and non-homesteaded property and provide an environment where both individuals and businesses can flourish.
Over the course of the past six months, you and numerous other like-minded citizens wrote to me to express your views on potential changes to Florida's property tax system. By now you have probably read or heard that my colleagues in the Florida House of Representatives and I passed comprehensive property tax reform last week during a special session of the legislature. Since you were thoughtful enough to contact me with your suggestions, concerns and much-appreciated advice, I thought I would take a few minutes to get you up to speed on precisely what was accomplished. A detailed summary of the reforms we passed and what happens from here is below for your review.
It's important to note that all of what I will outline for you can also be summed up in one succinct statement: every property tax payer in our state will see reductions in their next tax bill. The reforms made by your legislature will provide long overdue relief to taxpayers and a valuable boost to our state's economy. And this is achieved without forcing local government to reduce any essential services!
WHAT WAS CHANGED?
The changes adopted during the Special Session of the Legislature were broken up into two bills. The first addresses tax rates imposed by local governments. The second comes in the form of a proposed constitutional amendment.
Tax Rollback & Capping Future Revenues
Passed by a near unanimous vote of the legislature, all property owners will see an immediate reduction in next year's taxes. All governments will have to roll back their rates to the 2006 fiscal year levels. The size of the cuts will vary from city to city and county to county based on each individual government's spending habits.
Perhaps more important though, HB 1B also creates a predictable system for increases in future years. Revenues to local governments will now be limited to growth in per capita income and new construction. Exceptions are permitted only when a super-majority of the governing body or the voters in that municipality vote to override the new revenue cap
All voters will have the chance this coming January to forever change Florida's property tax structure. My colleagues and I voted to give the voters the largest say as to how our property tax system should be organized. If agreed to by 60% of the voters who go to the polls on January 29, 2008, SJR 4B will create a new super Homestead exemption that eliminates tax liability on the first 75% of value on primary homes up to $200,000 in value. Further, 15% of a home's value for the amount ranging from $200,000 to $500,000 would also be exempted.
If successful at the ballot box in January, primary residents who choose this plan would see it replace the current $25,000 exemption and 3% Save Our Homes cap. It is important to note, however, that no homeowner will be required to make this change. Because many residents benefit so remarkably from the Save Our Homes protection, we as a legislature felt it vital to make this exemption exchange fully optional. Anyone who wishes to remain protected by Save Our Homes will have the right to do so for as long as they reside in their current home.
The following is a brief run-down of who will benefit from the property tax relief package passed during the special session:
All property tax payers
In the most basic terms possible, it is simply a fact that anyone who pays property taxes in Florida will see reductions in their next tax bill. And while the savings will vary by each city and county, by placing in state law strict revenue caps the protect taxpayers against volatile increases in future years, one can easily see that the bleeding has stopped.
Additionally, if passed by voters in January, the constitutional
amendment portion of this reform package will offer even greater
benefits to several classes of taxpayers.
Tangible tax benefit for businesses
Under the proposed constitutional amendment, small businesses will see an average savings of $2,100 per year with a reduction in the amount of tangible personal property taxes paid. Tangible personal property valued at up to $25,000 will be exempt from taxation under the terms of SJR 4B
SJR 4B will authorize the legislature to provide statutory tax relief for homes classified as workforce or affordable housing.
Residents 65 and older who have a household income below $24,214
annually will see an additional $50,000 in exemption applied to their homestead property.
WHAT DOES THIS MEAN?
Aside from the reduction in property taxes, many have asked me what
effect this legislative action will have on a variety of areas. The
following is a brief explanation of the impact property tax reform will have on government, the economy and our families:
Ensuring local governments have the necessary resources to provide
fundamental services to citizens is something the legislature has
respected throughout this process. While my colleagues and I were of the belief that government spending had reached a boiling point for many residents, I feel the legislation we passed was careful to protect essential services like education, police, fire, medical rescue and trash collection. While there will be arguments on both sides of the discussion that the rollbacks go either too far or not far enough, striking a common ground that provided relief and protected essential services was an achievable goal.
I'm pleased to report that not only have many city and county leaders throughout Florida already indicated essential services can be preserved under this plan, the leadership in both the Republican and Democratic parties in the Florida House of Representatives has also vowed that education funding will remain unharmed as a result of these changes!
Florida's economy was beginning to feel the negative effects of high property taxes in recent years. Our real estate market has slowed considerably and retail sales were being hurt in the crunch of higher taxes. By cutting property taxes across the board now and brining economic predictability to the table in the form of future revenue caps, Florida's booming real estate market now has the potential to resume.
With that brings a needed spike to our businesses in Florida in retail sales.
"Un-trapping" Florida families
Millions of Floridians have talked of being "trapped" in their homes due to the current tax structure. By passing the constitutional amendment on January 29, 2008 and creating a super Homestead exemption for primary residents, no longer will Florida's growing families looking to move to a larger home or seniors seeking to downsize to a smaller one be hit with an avalanche of new property taxes when purchasing a new home.
Fairness to all
Above and beyond the numbers - whether they relate to government or to our residents - the property tax reforms are fair to all groups of taxpayers. Our current system - though beneficial to some - created an uncompetitive environment for businesses, recent home buyers, and second-home owners. With the passage of HB 1B and SJR 4B, a much more transparent and equitable tax system can be achieved.
I hope as you learn more about the reforms we have put in place that you will feel free to contact my staff and me should you have any additional questions. I appreciate the opportunity to serve you and to address your respected views on property taxes in our state.
Phone: (386) 736-5100
Fax: (386) 736-5102
230 N. Woodland Blvd. #222
DeLand, FL 32720
Friday, June 15, 2007
One nice feature that didn't look like it would make it is the option for people to stay under the Save Our Homes plan. If you'll look to one of my last posts, that was a major concern for owners of more expensive property. As Save Our Homes moves out of the picture, the tax situation will return to a more normal position. Eventually, this will restore a balance between non-homesteaded and homesteaded properties. Of course, homesteaded property will always have savings but it will now be more in line with an appropriate figure.
Lawmakers cut property taxes, more may come - 06/15/2007 - MiamiHerald.com
Thursday, June 14, 2007
SAVE OUR HOMES UPDATE!
In a few hours we will commence to debate a Constitutional Amendment which will repeal Save Our Homes.
This protection for our citizens will be replaced by a higher homestead exemption for homesteaded residents. It does NOT address second homes or commercial property. If passed in both Houses, it will be put before the voters (probably in January) and will need 60% approval. While it grandfathers those who currently would be better served by portability (22% of residents) it does NOT allow for portability.
I have shared with leadership my opposition to this legislation!
* With a weak real estate market we need portability.
* This Bill affords little protection to South Florida residents since their homestead will be valued higher than the $200,000 levels for the largest tax break.
* Benefits would not be received for several years.
* Exclusion from SOH benefits would not be your option. If you are $1 under the cut point you will not qualify.
* Under SOH your assessment could not increase more than 3%. With this bill your assessment could move upward in an unlimited
amount. In some instances that could result in 10-15% tax increase
in one year.
* High end buyers, while protected for a short time, might pay
thousands of dollars more in taxes if they stayed in their home for a number of years.
* Realtors will be particularly hurt by this bill.
Later today, I will offer amendments to provide portability and save Save Our Homes. Contact your Representatives and House leadership urging them to vote for these amendments.
Carl J. Domino
Tuesday, June 12, 2007
$200,000 x 25% = $50,000
$ 50,000 x 85% = $42,500
$50,000 + $42,500 = $92,500
At a 20 mils rate, that would equate to $1,850 in tax. That is almost certainly lower than the Save Our Homes rate. The same house with a $25,000 homestead exemption today would be $4,500 if you were to buy it new.
There are some advantages and some disadvantages with this scheme. The advantages are:
1. It will make everyone more equal than under the SOH plan which will currently have people paying dramatically different prices based on how long they have been protected.
2. It will not penalize someone who is trying to move into a community or moving from one home to another.
There are also some disadvantages:
1. Higher priced homes will be paying dramatically more than they currently are. One example of a riverfront home owned by people who have been there since 1983 would have the owner's taxes change from taxable value of $435,000 to taxable value of $1,100,000. That means a change at 20 mils from $8,700 to $22,100!
2. It still does not address the investment (rental) property. Owners of those properties will still pay a disproportionate share. That cost will be passed on to our renters.
3. It does not address commercial property. Our businesses are being so heavily taxed now that they are reducing costs.
These disadvantages are severe. These issues must be addressed in order for the plan to succeed. However, the advantages are strong enough that this plan is a benefit to our State. Two proposals which are being discussed would benefit the plan:
1. Allow property owners to maintain Save our Homes benefits at their option. This will protect people who are living in more expensive homes who have had the promise of lower taxes from the State.
2. We should extend some benefits to non-homesteaded properties. While there is a focus on homesteaded properties, we need to consider our economic engine. Vacation homeowners, companies, and renters need protection as well.
Front page news - newsjournalonline.com
Monday, June 11, 2007
Since writing our last update, we have been informed that the Legislature scheduled a General Election for the Party Primary, on January 29th, 2008. Accordingly 75% will not be required to get the Constitutional measure on the ballot.
In today’s Property Tax joint meeting, the possibility of portability being put on the bill was raised. During the next two weeks, we will keep you informed in a timely manner on the Special Session.
Carl J. Domino
Letter from the Representative:
SAVE OUR HOMES UPDATE!
Finally after a 4 year battle we are beginning to see a consensus growing
around property tax relief. While we do not have details much of the proposal provides meaningful and responsible tax relief. This week in Tallahassee we will iron out details and work hard to ensure that taxes will remain affordable.
The plan has two parts:
1. A rollback on millage rates - this is legislation which can be passed in our special session. It will result in reduced tax bills for all property owners in the state. This reduction should be reflected in this year's tax bill. Additionally, and equally important, the growth in future tax revenues will be restricted.
2. Constitutional change. The Legislature will vote on a change in the Constitution, which will substitute a progressive property tax system for the current protection of Save Our Homes. It is projected that about 70% of individuals will pay lower taxes under this system. The remaining people can elect to retain Save Our Homes.
This proposal has to receive support from 60% of legislators in the special session. To get it on the ballot in January 2008, it needs approval of 75% of the members of each house of the legislature. Then it will need approval of 60% of the electorate. The change in tax bills will be reflected two years from now.
Unfortunately, neither portability nor elimination of the "best and highest"
use for appraisals will be included. Without portability 30% of homesteaded property owners will face a significant tax increase if they choose to sell their property and purchase a home of equal or higher value. This further devastates the dreams of many Floridians who wish to move.
Since it is a progressive tax scheme, it will be the higher end home owner
who will elect not to move - costing real estate agents important commission revenues.
We will continue to fight for portability and invite your continued input and your thoughts on the proposals.
Carl J. Domino
Monday, May 28, 2007
Old Florida enclave is new Florida hot spot - 05/23/2007 - MiamiHerald.com
Tuesday, May 22, 2007
This article sounds much more like the solution that was proposed by Morgan Gilreath. It seams encouraging that they are looking at other solutions. It doesn't seem to address the issue of non-homesteaded property. I'm not certain if these exemptions would apply there or not. It also seems to allow for people with SOH benefits in place to continue which may be troublesome. That could cause additional tax burdens and increase the tax issue for non-homesteaded businesses and for non-homesteaded renters.
At the same time, moving to a completely percentage based solution without considering the SOH people could have a dramatic negative impact on those who have been in the same home since 1992 when their property value was locked in.
One potential solution is to allow that benefit to continue, offer a 20% exemption as an alternative across the board. As people move out of, or heir, their SOH properties, they would fall under the new plan. As more and more people come off of the SOH plan, the percentage exemption could be increased with the goal of keeping taxable value in line with the property value changes. While I haven't examined the 20% figure, Morgan Gilreath used a figure of 62% of taxable value to equal today's SOH exemption (see an earlier article) which would be a 38% exemption. If that is accurate, the 20% figure is roughly half the savings to begin with. However, many homeowners would benefit greatly from that type of reduction. As would renters and business owners, the segment of the market that we are currently attacking.
Thursday, May 3, 2007
SAVE OUR HOMES PORTABILITY UPDATE!
It was just announced that while a conceptual framework which would lead to meaningful tax relief has been reached, it would be impossible to complete the project within the next 72 hours.
Accordingly a Special Session to deal with property taxes has been scheduled for 10 days commencing on June 12th through June 22nd , 2007.
Prior to that time we should have more information on the direction which ongoing talks are going and we will continue to update you on developments as they occur.
Rep. Carl J. Domino
Monday, April 30, 2007
SAVE OUR HOMES UPDATE!
While no one can ever know for sure what is going to happen, things are moving
quickly on the Save Our Home Portability front.
The Governor has now publicly joined us in calling for both full SOH Portability
and a Special General Election to implement it as soon as possible.
The Florida Association of Realtors (FAR) have released a major call to action
asking for, among other things, allowing for the portability of SOH savings, with
retro-active portability. Remember until early 2006, portability was opposed by FAR.
I have personally spoken with leadership on both sides of the aisle in the House
and with one possible exception, they are very very supportive.
I remain optimistic that we will obtain necessary votes to get property tax relief
for our citizens without a Special Session. I think portability is an important
element in allowing people to live in the home of their dreams and vital in
helping to invigorate the real estate market.
Your legislative contacts have been most helpful in getting us this far and we need
to keep up the effort to get this matter on the ballot.
Already we have started discussions to get supporters in the Special General Election,
so that we can obtain 60% of the votes necessary to get portability passed. As part
of this effort we need to increase our e-mail data base. Please send us any e-mail lists
you have, which we can add to our updates data bank and advocacy messages.
Rep. Carl J. Domino
Saturday, April 28, 2007
Volusia leaders beg lawmakers to hold off on tax cuts - Orlando Sentinel : Volusia County News Volusia leaders beg lawmakers to hold off on tax cuts - Orlando Sentinel : Volusia County News
State: Market chills, tax bills won't
Friday, April 27, 2007
The Jones' have a house that they have lived in for ten years. The house is appraised for $300,000 and they sell the house to the Smith's for $400,000. Because the Jones family have been protected, they were paying taxes on $200,000. They sell in February. For the remainder of that first year, the Smith's pay on the Jones' protected value of $200,000 or $4,000 annually. Each month, they pay their mortgage principal and interest plus their tax and insurance. They have calculated their monthly payment to be:
$1000 - Principle and Interest
$ 292 - Property Taxes
$ 150 - Insurance
$1442 - Total monthly payment
At the end of the year, they receive their notice that their property has increased in value to $400,000 (their purchase price). Because they no longer qualify for the tax savings under the protection that the Jones' enjoyed they now pay on the full price (minus $25,000 for homestead). Their new payment will be:
$1000 - Principle and Interest
$ 625 - Property Taxes
$ 150 - Insurance
$1775 - Total Monthly Payment
The difference in property taxes is more than double. The effect on a working family can be catastrophic. If a family earns $30,000 per year before income taxes (well above our average), this represents a $4,000 per year increase in expenses. The "Save our Homes" amendment effectively pushes them out.
This article discusses those effects.
Front page news - newsjournalonline.com
Wednesday, April 18, 2007
Monday, April 16, 2007
1. Daytona Beach/Halifax area Chamber of Commerce
2. Ormond Beach Chamber of Commerce
3. Holly Hill Chamber of Commerce
4. South Daytona/Port Orange Chamber of Commerce
5. South East Volusia Chamber of Commerce
6. DeLand Chamber of Commerce
7. West Volusia Chamber of Commerce
The meeting was very interesting and included about 70 people from the various boards.
Frank Bruno, Chair of the Volusia County Council, spoke about two topics. The first is the rail system. His opinion is that with the impending tax reform there won't be money in the budget to commit to $3.5 million per year for 30 years. Reaction in the room was mixed. Several people felt that it could increase home values as more people from Orlando commute into West Volusia. An argument was raised that it won't effect the East side of the county but they would still share in the cost. Further, the current agreement includes a number of counties plus state and federal funding. This type of arrangement will not be offered again.
In addition, he discussed tax reform. He pointed out that roughly half of all property tax goes to the school system. He would like to fund the school system with a 1% sales tax and remove them from the property tax budget thereby cutting everyone's property tax in half. His point being that 1% is small enough not to have a substantial impact on tourism or other spending but could raise substantial money. Resistance was raised as sales taxes are not stable from year to year and that could effect planning for the school board.
My opinion is that it may be a good idea but we would still have the disparity that is created by the Save our Homes (SOH) amendment. I do consider it a very positive mix to the discussion that has been taking place. One consideration may be to repeal SOH, apply the 60% rule that Morgan Gilreath mentioned (in a previous post) and implement a 1% sales tax to offset the overall property taxes. General millage rates could be set in advance and then reduced based on available property tax income. I'm curious about opinions.
Friday, April 13, 2007
I read this story in this morning's paper and it seems very interesting. The highlights from the article are:
· Roll back city and county tax rates to 2005-06 levels adjusted for growth in population and income, freeze them for one year and then cap them going forward using the same formula.
·Double the $25,000 homestead exemption for first-time homebuyers until the value of the Save Our Homes cap on taxable value increases reaches the $25,000 level. The exemption only applies to homes valued at $100,000 or more.
· Provide "portability" of the Save Our Homes benefit. Homesteaded property owners who move could take the value of the cap with them, though their initial annual assessments would increase by more than the 3 percent allowed under the current cap.
The plan also includes a $25,000 exemption for tangible personal property for businesses. This includes such items as computers and office furniture.
The plan also calls for clarification of state law regarding assessments and a break for affordable housing.
It would require local governments to post some tax and spending information on their Web sites.
My concerns are:
1. How does it address the concerns of renters who can't afford to buy a home at current tax levels? I don't think that a larger homestead expemtion is sufficient.
2. What about businesses? A $25,000 exemption is nothing when they are facing enormous tax burdens. It also doesn't address the continuous increases that they will see as more properties are protected from taxes.
We can't expect our businesses and renters to bear the entire tax burden. Ultimately, if you have the majority of properties protected, the minority will be dramatically effected. Providing additional protections for that majority simply increases the effect that the minority will feel.
I look forward to reading and hearing more about this new plan to understand it more completely.
Thursday, April 12, 2007
Save Our Homes Amendment
There are a number of things to explain regarding our current situation. Florida has an amendment to the constitution (amendment 10) called the "Save Our Homes" amendment. On the surface it seems like a fantastic solution. The concept is that we will limit our property taxes on homesteaded property to 3% or the consumer price index, whichever is smaller. The amendment was promoted in order to avoid people being taxed out of their homes. As property values increased in value, we would prevent the taxes on those homes from rising. The result, however, is not what was being promoted.
Over the last several years property values have increased dramatically. The taxes on homesteaded property have been held relatively steady. When cities or counties in Florida increased taxes over the years it didn't affect the vast majority of people since they were homesteaded. The effects that the increases had were limited to non-homesteaded property. Because of that limitation most people didn't object as our tax base increased each year. The problem is that as taxes went up and the majority of people (homesteaded property owners) were unaffected the remaining group was dramatically affected. In fact they were affected at an exponential rate. If you've ever seen a chart of exponential growth, you'll realize that it doesn't take long for a number to grow entirely out of control. In fact, in 2006, non-homesteaded properties paid 96% of the annual increase in property taxes in Volusia County! That's exponential growth in action.
The people who were affected are very straight forward:
- Anyone who had to move
- People moving into the community
- Commercial property
- Non-homeowners (renters)
The first group often is the same people that the program was designed to protect. One of the original concepts was to protect the retiree who's property tax increases grew out of control and effectively taxed her out of the home. Under the new plan, though, the retiree who wanted to downsize from the large home with substantial maintenance costs would likely be looking at an increase in property taxes to move into a smaller home. In addition, the existing home may have a reduction in value since the new homeowner will be assessed a MUCH higher tax once it is out from the protection. The person who is forced to move is losing substantial potential equity because the new owner must factor the tax differential. For example, it is not uncommon for a new owner to pay four times what the previous owner was paying for the same house. From a real estate perspective this reduces the frequency of moves. People typically move every three to five years based on changes in their lives or economic status. That is not happening and is having a negative effect on the real estate industry (Realtors, mortgage companies, furniture companies, builders, contractors, etc.).
The second group of people is moving into the community whether from out of state or not. This group is being assessed at much higher taxes than the people who have been here. Many local people aren't concerned about these new people but I should mention that, as in the example above, it has a negative impact on home values. It also has a negative impact on economic development. If you were considering relocating a business to a new community you may be hard pressed to choose a place that is going to charge you much higher income taxes on your personal residence as well as those of all of your employees. These are certainly factors that will be considered. In addition, this creates an inequality as people move into a neighborhood or community and realize that they are paying substantially higher taxes than their neighbors. These problems infuriate and confuse new homeowners and cause unnecessary friction.
The third consideration is commercial property. This is one of the most important because these are the job providers. We are taxing our job providers at such an incredible rate that it will have a negative impact on our ability to attract strong industry. Further, small business represents the bulk of the employers in the United States. When your tax bill is increasing as quickly as ours are it is very difficult to consider growth and tough decisions need to be made. In Florida our job providers are facing increased taxes, insurance, and health care expenses such that wages will have to be considered as a source of future savings which will mean job loss if we can't control our spending.
Lastly, we are taxing the poorest of our people. If you can't afford to buy a house in Florida you can not benefit from the homestead exemption and you can expect your rents to reflect it. Investment property, apartment complexes, and other rental property are part of the properties that are bearing 96% of our tax increases. Landlords who typically collect very small profits, if any, from their investments today will have no choice but to continue to raise rents. This will apply pressure to the people that need to feel it least of all in our community. While we all talk about the importance of affordable housing we are applying one of the most egregious regressive taxes of all time on our citizenry.
A number of solutions have been put forth and are currently being discussed in the legislature. Both houses of congress and the Governor have all put forth potential solutions. I'll not claim to be an expert on all of them but I will list a few of the most commonly discussed.
1. Increase the homestead exemption from $25,000 to $50,000. - I'm not certain what effect this will have except to exacerbate the problem. It doesn't address commercial properties or renters. It simply reduces the amount of money coming into government, thereby forcing government to raise the millage rate and increase taxes across the board.
2. Extend the 3% property tax cap to commercial, industrial, and investment properties. - This one seems on the surface to be a good idea. My concern is that the remaining properties where tax increases are available would be dramatically effected. Moving either into the community as either an individual or as a business would be catastrophic. It would simply eliminate the ability to attract new business to the state of Florida as this tiny minority would be responsible for all new taxes.
3. Portability - The concept of portability is that you can use all or a portion of your current savings when you move to a new home. This will help with the groups who would like to downsize their homes or move to larger homes as their families need. This will also help to alleviate the negative effect felt by the real estate industry. Given that your author is in the real estate industry you might think I would favor this concept. However, this solution will cause a number of problems. It will dramatically increase the costs to businesses and to the poor. It could have such a negative impact on economic development that the long term prospects are not positive at all. Further, there are challenges to Counties like Volusia and Flagler. We are the lowest priced coastal property in Florida. If someone was to move from a higher priced are (Naples, Sarasota, Miami, or Ft. Lauderdale) to our area, their savings (based on how the law was written) could substantially reduce, and possibly eliminate) the property taxes they pay in our Counties.
4. Sales tax increases - Similar to "The Fair Tax" concept, one proposal is to either dramatically reduce property tax or eliminate it entirely and replace it with an increase in sales tax ranging from 2.5 to 4 cents. Opponents to the concept say that sales tax is a regressive tax while property tax is not. I would encourage them to reexamine our system. There are also concerns that this could have a negative impact on commerce. Particularly with regards to larges purchases where it may make sense to buy out of state and save the tax difference. I don't think I can see all of the potential impacts of this change but it does seem interesting.
5. Replace our current solution - One opportunity is to replace our existing cap with a flat tax across the board. This seems very interesting. Rather than having a homestead and a cap on top of it, we would levee a tax of 62% of the just value of the home. According to Morgan Gilreath, the result would be revenue neutral. The taxing authorities would generate the same amount as they otherwise would and property tax would not change much for property owners. In fact, it would be slightly down (on average) for people whose homes are assessed at under $400,000 and slightly up for people whose homes are assessed at higher prices. Interestingly, 96.5% of residential property in Volusia County is assessed at under $500,000. Further, houses priced at up to $1,000,000 would see property taxes of about $12,000 per year compared to a current average of about $10,000. Owners of those homes would likely see a fantastic increase in property values as there is a general reluctance to purchase a home whose taxes are likely to run $40,000 under the current system. The approach is similar to our neighboring state of Georgia who uses 60% of just value as a starting point. This system, too, has a flaw though. I think it highly unlikely that any elected official will propose a repeal of the Save Our Homes amendment which would be necessary to pass this legislation. The amendment as it stands is so confusing to the average individual that they don't understand the negative impact that it has on their property value, our economic well being as a community, our businesses, and our poor.
In addition to any recommendation regarding our taxing solution, we also can discuss limitation of government spending. It is very clear that local government spending is out of hand. However, if we can find a solution that puts everyone back on a level playing field rather than having most homeowners “locked-in” at a particular rate, we should start to see homeowners exert themselves to keep spending in check. Our current solution only taxes businesses and those who have recently moved. These are not the vocal majority that will exercise their power in the polls to ensure that spending is appropriate.
More than anything I hope that we can find a solution to this problem. There is one certainty with regards to exponential functions. The impact gets worse every day. The Save Our Homes amendment offers a real challenge to the future of Florida's economic health and is a topic which is too confusing for most people to have a strong understanding.
Monday, April 9, 2007
Business - newsjournalonline.com
Friday, April 6, 2007
I also reviewed the number of inbound buyer inquiries. They are up almost fifty percent in a quarter over quarter comparison. That's really good news.
Closings were better in the first quarter but didn't even begin to compare with where we were at the peak of the market (I don't think anyone expected it to). Still, up is good.
Also, prices on new contracts seem to be trending upwards. I'm a little surprised because I expected a continued small slide in pricing but I'm certainly pleased. Let's hope we're seeing the market pick up.
Thursday, April 5, 2007
Wednesday, April 4, 2007
Thursday, March 1, 2007
Adams, Cameron & Co. is the Volusia and Flagler County area's largest real estate company. and while the statistics are directly pulled from that area, the concepts should apply anywhere.