Florida Residents Respond - Vote Yes for Real Estate Tax Reform

By a yes vote of 64%, Florida residents passed the real estate tax reform amendment at Tuesday's primary election. The new tax amendment was the first Florida ballot proposal that faced the recently passed requirement of a 60% approval threshold instead of a simple majority. Changes in the new amendment included doubling the standard homestead exemption to $50,000; keeps the state's Save Our Homes (SOH) feature which caps annual real estate tax increases on homesteaded properties at 3% per year; allows homeowners to take a portion of their Save Our Homes tax exemption with them when they move; offers a tax break on personal property for business; and caps tax assessments on commercial and non-homesteaded properties at a maximum of 10% per year.

Immediate winners from the new tax law will be longtime homeowners who moved last year or plan to move now, existing homeowners, businesses that pay taxes on tangible personal property, and owners of commercial property, rental units or second homes whose values have gone up more than 10 percent in the past year. Anyone who receives the additional homestead exemption should see an average savings of about $240 per home statewide. However, not everyone in the state will get the added exemption. It doesn’t apply to homeowners in mostly rural areas whose properties are assessed at between $50,000 and $75,000.

Portability of the Save Our Homes (SOH) feature played a major role in getting the new amendment passed. Realtors® around the state expect both buyers' and sellers’ pent up demand to generate an immediate increase in home sales based on this new provision. Portability will be available whether you move up or down in value. For example, if an owner of a home with a $300K value is currently paying real estate taxes on $150K because of their SOH savings purchases a new home with a value of $500K, they get to keep their SOH savings and only pay taxes on $350K. The savings also apply if you downsize. If a homeowner of a $500K home is currently paying taxes on $250K because of SOH savings sells and purchases a new home for $300K, the homeowner keeps their 50% savings and only pays taxes on only $150K.

The portability provision is retroactive to January 1, 2007, and sellers may transfer their Save Our Homes savings credit provided:

• The residence sold last year was homesteaded;
• The new residence qualified for the homestead exemption as of January 1, 2008;
• The owner applies for the exemption and transfer with the county property appraiser by March 1, 2008.

While the new amendment is a great step in helping stem the rise in real estate taxes, Gov. Charlie Crist and state legislators have promised to continue their efforts to educe taxes even more. The Taxation and Budget Reform Commission is also looking into options and the state's constitutional tax commission is meeting this year and as the power to put additional reforms on the November ballot. While no specifics have yet to be decided, everyone involved is looking for ways to further reduce real state taxes.