Florida’s Property Taxes

As we Floridians know our property taxes are high. Even with the little $25,000 homestead exemption. And even with Save Our Homes. Our property taxes are so high that a lot of Floridians are considering leaving the state. Even if you wanted to move and downsize so that you can afford that place closer to work, you can’t due to the non-portability of Save Our Homes.

But first, here is an overview of Florida’s property tax system, especially for our out of state friends reading this blog.

Persons who own property within Florida are subject to payment of an annual tax based on the assessed value of the property as of 1 January. Commercial property and residential property that is rented out or being used as a second home is taxed at the full rate.

However, for those persons that call Florida home there are not only one but two tax breaks. The first tax break is the Homestead Exemption which exempts a portion of a property’s assessed value, which is right now at $25,000. The other tax break is called Save Our Homes, which is a voter initiative passed in 1995 and (according to the Pinellas County Property Appraiser’s site) limits annual increases in assessed value of property with Homestead Exemption to three percent or the amount of the Consumer Price Index, whichever is lower.

Even with these tax breaks for you, the Florida resident and home owner, property taxes continue to be high. Basically this happens when the tax rate goes up but there are two principal reasons you should know about:

Homestead Exemption: The current $25,000 homestead exemption is not enough anymore given today’s housing prices which are practically in the six-figure range nowadays. $25,000 may have been a lot of money back then but not now anymore, insofar as property taxes are concerned.

Save Our Homes Cap: Let’s say you wanted to move closer to work and you had to downsize a little so that you can afford the home or condo you want. Great! But can you take your Save Our Homes Cap with you? No! The Save Our Homes Cap is not portable and you can’t take it with you when you move. Once you buy the house or condo you want the assessed value has to be reset to equal market value, which results in higher property taxes. No matter why people cannot move for fear of increased property taxes which can make life unaffordable!

So, what is being done to address Florida’s property tax crisis?

Several proposals were floated before the regular session of the Florida Legislature got underway this year. One popular proposal floated by Florida House Speaker Marco Rubio was to eliminate property taxes altogether and replace it with an increase in the Florida sales tax, which is currently 6% statewide plus a local option sales tax depending on the county (in Pinellas County, this local option sales tax is 1% and is dubbed by residents as the “Penny for Pinellas”).

Other proposals were to raise the homestead exemption to at least $50,000 or higher and make the Save Our Homes Cap portable. Unfortunately during the regular session of the Florida Legislature the House and Senate were unable to come to some kind of agreement.

So, a special session has been called from 12 June 2007 to 22 June 2007 to deal with Florida’s property tax crisis. However, another proposal floated by Rep. Rubio would eliminate the Homestead Exemption and Save Our Homes; instead it would exempt 80% of the first $300,000 of a home’s value, 70% of a home’s value for each dollar between $300,000 and $1,000,000 and 30% of every dollar above $1,000,000, according to a St. Petersburg Times article on 18 May 2007.

In my opinion, the latest proposal by Rep. Rubio will not benefit most Florida property owners; it will benefit only the wealthy and not the working class.

Here is my workable solution for Florida property tax relief which would benefit all:

1. Increase the Homestead Exemption to $100,000. For a lot of Floridians this would be that your home is tax free depending on the value of your home.

2. Make the Save Our Homes cap portable so that Floridians who want to move can do so without the fear of your housing budget being consumed due to high property taxes. And that way, those who want to move (let’s say closer to work and have to downsize to afford what you want) can do so.

3. Commercial properties and those residential properties used as rentals or as second homes do not qualify for the Homestead Exemption/Save Our Homes benefits as mentioned above. I believe owning a second home is a luxury and, as such, should not qualify for any exemptions whatsoever.

So, I urge you Floridians to please email your state senators and representatives before the special session gets underway on 12 June 2007. To find the addresses, telephone numbers and email addresses of your elected Florida officials simply click on this link to access the Florida Legislature’s web site. Additionally, I want to hear from you by posting a comment about how you feel the current system of Florida’s property taxes are impacting you.

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