Friday, May 11, 2007

Florida Property Tax Update - The Compromise is Near!!

After some interesting phone calls from people wanting to know more and learn my opinion about what's going on in Florida Taxes, and some people who didn't get what I was saying, here's some more breaking News from the regarding the Florida Property Tax:

House Speaker unveils new approach to property tax relief that could halve bill

Florida House Speaker Marco Rubio R-MiamiThis afternoon Florida House Speaker Marco Rubio R-Miami announced that there was a compromise on the table during a special joint session of the Florida House and Senate including the attendance of Governor Charlie Crist.

Mr. Rubio outlined his plan in an Op-Ed piece published in today's Orlando Sentinel Newspaper.

In it, he tells of how lawmakers are taking a different approach to property tax reduction that will offer large exemptions - but not wipe out property tax altogether.

In recent weeks, many people have signed a petition hoping for a total eradication of property taxes... something the House Democrats favored but is wholly unrealistic from any perspective.

Instead, the new plan would reduce all property tax and even offer measures of reductions to business owners and renters. The method that would be used would be a percentage-based exemption system. It appears that this system would be more fair and equitable to different types of property owners - while remaining flexibile enough to remain easy to manage for tax collecting authorities.

While there is yet to be a consensus as to the formulas and the exact percentages offered per property type, House Speaker Rubio offered an example as follows:

  • On the home's first $300,000 in just value, 80 percent would be exempt from property taxes.
  • On the next $700,000 in just value, 70 percent would be exempt.
  • On just value above $1,000,000, 30 percent would be exempt.

Essentially the exemption for a $300,000 house would be $240,000. For a $500,000 house it would be $240,000+$140,000 or $380,000. For a $1,000,000 property it would be $240,000 + $490,000 or $730,000.

This is something that would likely be seen for a Homesteaded property in the state. Businesses, Commercial Property owners, Seasonal Residents, Investors and 2nd Home owners would all have their own unique formulae.

The debate continues as House and Senate leaders now need to decide the exact percentages everyone wants to save per property type.

This plan is a variation of what House Representative David Simmons R-Maitland suggested in an earlier idea. The goal of the plan was to target the hardest hit tax payers - which are currently the homeowners with valued between $200,000 and $500,000.

The other nice effect of this plan is that there is no Sales Tax Swap... an issue much discussed in local and national media. Raising Sales Tax to accomodate lost revenue would not only cut city and state budgets to the core, but also tax lower income citizens and businesses harder than higher income citizens. It also neglects our seasonal residents and foreign nationals.

This bill would cut the overall tax-cut from $50Billion as the House originally offered to something closer to the $34Billion plan of Governor Crist - which is still much higher than the $24Billion planned cut of the Senate.

This plan may offer a choice to taxpayers benefitting under the current Save Our Homes Amendment. If the new plan would raise their taxes they may be offered the choice to stick to their old plan to save money. This will mainly affect those who bought years ago and whose property values increased the most over the past few years. With the expected rollback, to which year we don't know, this will definitely create some questions for such citizens whose property taxes will be much lower based on their long term ownership.

Also addressed was Portability... so tax payers could take a lower tax base with them when they move.

The only evident negative of this idea right now is that it may have to be issued as an amendment - which would mean it would have to wait for a November '08 vote rather than being able to claim Bill status and take effect immediately.

Local governments that have put some capital projects on hold, will be relieved if this is the case as they will still have enough budget to complete some of the most pressing projects like renovating and upgrading hospitals, firehouses and other public facilities still in disrepair from the hurricanes of 2004-2005. It will also help them afford to rebuild the beaches from this past week's mass erosion due to SubTropical storm Andrea.

More Florida Mortgage and Real Estate News You Can Use From
David A. Podgursky, MBA
The Mortgage Go To Guy
Your Source for Residential, Commercial, Investment and Relocation Mortgages in Florida

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