I wanted to forward this letter that was sent to me by Rep. Carl Domino on Portability. I think it's very interesting but I'm not a supporter. I think the portability bill could help our residential real estate market, and I know we all need that. Unfortunately, I think it would have too negative an impact on our local government and on commercial property. I welcome comments.
His e-mail:
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
Wednesday, June 27, 2007
Tuesday, June 26, 2007
Florida Tax Reform – What does it mean to me? A look at the numbers!
Overview
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.
Background
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
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.
Opinion
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.
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.
Background
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
There are a few challenges related to the Save Our Homes amendment. The biggest issue is that homesteaded property values are more or less locked in place. Since the property values from a taxable perspective don’t increase on homesteaded property, non-homesteaded property must make up the difference. Those properties include second homes, investment homes, rental homes, commercial property and industrial property. As property values increased throughout the second half of the 1990’s and drove rapidly upward until 2006, the property taxes rose dramatically. Most homeowners were almost entirely unaffected by the changes. Being unaffected, the voters had little incentive to police the municipalities who control millage rates.
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.
Renters
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.
Commercial
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.
Downsizing/Upsizing
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.
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.
Renters
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.
Commercial
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.
Downsizing/Upsizing
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.
Opinion
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.
Letter from Pat Patterson
From the desk of State Representative Pat Patterson:
Dear Neighbor,
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
Constitutional amendment
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.
WHO SAVES?
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
Affordable housing
SJR 4B will authorize the legislature to provide statutory tax relief for homes classified as workforce or affordable housing.
Low-income seniors
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:
Services
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!
Economic Gains
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.
Best regards,
Pat Patterson
Phone: (386) 736-5100
Fax: (386) 736-5102
E-mail: Pat.patterson@myfloridahouse.gov
Mailing address:
230 N. Woodland Blvd. #222
DeLand, FL 32720
Dear Neighbor,
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
Constitutional amendment
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.
WHO SAVES?
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
Affordable housing
SJR 4B will authorize the legislature to provide statutory tax relief for homes classified as workforce or affordable housing.
Low-income seniors
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:
Services
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!
Economic Gains
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.
Best regards,
Pat Patterson
Phone: (386) 736-5100
Fax: (386) 736-5102
E-mail: Pat.patterson@myfloridahouse.gov
Mailing address:
230 N. Woodland Blvd. #222
DeLand, FL 32720
Friday, June 15, 2007
Lawmakers cut property taxes, more may come - 06/15/2007 - MiamiHerald.com
Well it finally went through. The legislature has approved the tax cuts and it will be up to the voters in January. I will be very surprised if it doesn't pass despite likely lobbying from the various unions.
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
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
Latest Update from Rep. Carl Domino
I just received this e-mail from Rep Domino. I think he raises some very valid points. Several are the same as my comments in the last blog entry even. While I agree with him that this bill leaves some major gaps, it does seem to move in the right direction. It will alleviate some of the pressure that SOH is putting on non-homesteaded property. While not perfect it could be a step in the right direction.
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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
-----------------------------------------------------------------
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
Save our homes article
This article came out today and discusses some of the progress regarding changes to the tax issues. This new proposal sounds like progress. To summarize, 25% of the first $200,000 will be taxed and 85% of the next $300,000. So, if someone has a house that is worth $250,000 (roughly our median price), they will be taxed at:
$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
$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
Quick update
I just received this correction to Rep. Domino's earlier message:
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
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
Update from Carl Domino regarding tax changes
The letter below was sent to me via e-mail from Rep. Carl Domino who is in favor of the portability issues regarding save our homes. Realistically, the solution that has been proposed has several drawbacks. It is a step in the right direction because it has the potential of ending the current cap issues. The current solution provides for exponential cost savings every year for homesteaded properties. This new solution is (to some extent) a linear cost savings. In other words, we aren't getting as far out of whack. However, it still allows homeowners to opt to remain under the old system and, more importantly, does not address the problems associated with non-homesteaded properties. Renters and employers will bear the largest burden under the new scheme. The good news is that that burden will begin to be less proportional.
Letter from the Representative:
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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
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
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