Should You Take the Super Exemption?

In January, Florida voters will decide whether or not to approve the new amendment to the constitution proposed by the Senate. Under the amendment, Florida’s Amendment 10 – the Save Our Homes amendment – will be phased out and its place taken by a “super-exemption” which will also replace Florida’s $25,000 homestead exemption. Before you decide how to vote, it may be useful to figure out how you’d benefit under the new super-exemption.

 

Under the Super-exemption, homesteaders will have the option to retain their current Save Our Homes assessment cap or to take the super exemption. New homes and resale homes will be subject to the super exemption, without the option for Save Our Homes. Since part of the problem with Save Our Homes is that the assessment cap is based on the market value of the home at sale, anyone who buys a home after passage of the super exemption will actually benefit far more from the super exemption than from Save Our Homes.

 

Keep in mind that phasing out Save Our Homes only addresses part of the inequitable tax system. The Super-exemption will only be available for your primary home. If you own a second home, if you own rental property, if you own a business, you will see no benefit at all from the Super-exemption for those properties. That inequity remains to be fixed.

 

In addition, the Florida Association of Realtors suggests that 73% of those currently using Save Our Homes will benefit substantially from changing to the super exemption.

 

These are the figures provided by FAR for comparison purposes:

 

EXAMPLE 1 – How the new super-homestead exemption works:

• Homestead A has a just value of $400,000.
• Tier 1 would provide an exemption of $150,00 (75% of $200,000)
• Tier 2 would provide an exemption of $30,000 (15% of $200,000)
• Thus, the total exemption would be $180,000
• The taxable value would be $220,000
• With a total tax rate of 20 mills (slightly above statewide average), the tax bill would be $4,400.

EXAMPLE 2 – Compared to current property tax system with average Save Our Homes benefits:

• Homestead A has a just value of $400,000, the $25,000 homestead exemption, and has accumulated $100,000 in Save Our Homes protections.
• The taxable value would be $275,000
• With a 20-mill tax rate, total tax bill would be $5,500.

In the above examples, the new system will save the homesteader $1,100 in their tax bill for 2008.

EXAMPLE 3 – Compare to current property tax system with high Save Our Homes benefits:

• Homestead A has a just value of $400,000, the $25,000 homestead exemption, and has accumulated $200,000 in Save Our Homes protections.
• The taxable value would be $175,000
• With a 20 mill tax rate, total tax bill would be $3,500.

 

Hillsborough County residents can compare the two plans over the next ten years, by finding their property on the Hillsborough County Property Appraiser’s website and then clicking on “Super Exemption Calculator”.

 

Before you decide how to vote in January, sit down and figure out whether you’ll benefit more under each system. Keep in mind that if the amendment passes, you’ll be able to keep the Save Our Homes benefit if it is better for you. On the other hand, if you move and the measure doesn’t pass, you will NOT benefit from the far higher homestead exemption.

 

Finally, it’s vital to keep in mind that the Super Exemption is only a partial solution – it only addresses one part of the broken tax system. While it will remove the inequity for those who own primary residences, it does nothing to even out the unfairness in a tax system that discourages investment in our community by taxing investors, business owners, and second homeowners at higher rates than resident homeowners. It’s important that we keep reminding our elected officials that a job begun is not a job well-done. They need to finish what they’ve started.

 

Learn more at New Legislation is Only a Step in the Right Direction.

• Pasco County Property Appraiser