Real Talk about Florida's Real Estate Tax Change

Real Talk about

Florida's Real Estate Tax Change

lorida’s property tax has long been the subject of much debate and warranted a special legislative session in June of this year. With the signature of Governor Crist, this new law will have an immediate impact. How will it affect your future real estate taxes? The answer is …. It depends. Here’s why:

ost property related tax entities (cities, counties, and others) are required to freeze current tax levels for now. Later, each will be required to make additional cuts. These cuts range between 3 percent to 9 percent depending on the recent tax increases imposed by the local tax entity. Where taxes have grown at higher rates, citizens will see larger decreases. The state estimated the average homeowner in Florida will save $174 per year, providing they have the homestead exemption. Each August, the office of property appraiser for each county sends a document to homeowners called TRIM (Truth in Millage.) As always, this document outlines the taxable value of your home as well as the estimated taxes from each taxing authority within the county. Look closely at the TRIM you receive in August to understand how the state’s new property law will affect your personal tax situation.

he second part of the legislation recently signed by Governor Crist calls for a special constitutional amendment vote which will change the homestead structure in Florida. Voters will be asked to decide if we should, adopt a “Super-Sized” Exemption. The proposed exemption change would increase today’s $25,000 homestead depending on the total value of your home. Homeowners would receive a homestead exemption equal to 75% of the value of the first $200,000 of their home’s value. If your home is worth more, Florida’s new exemption would also eliminate taxes on 15 percent of its value between $200,000 and $500,000. The minimum exemption for all homes would become $50,000. The average sales price for s single family home in May of 2007 was $237,000. Using the Super Sized Exemption proposal homeowners would expect their new exemption to be:

Using the calculation above, the average homeowner would pay taxes based on only $81,450 with the new law versus today’s $212,000, a considerable benefit. As with everything, though, the new Super-Sized Homeowner amendment, if approved, comes at a price.

What is the Florida Homestead Exemption?

A part of the state's constitution. It shelters your home from forced sell by creditors, allows for the passing of your home to a surviving spouse in the event of death, and exempts a portion of the property from property tax.

75% of

15% of

Total

Value

first $200,000

$200,000-$500,000

Exemption

$237,000

$150,000

$5,550

$155,550

oday, Homeowners enjoy a constitutional benefit entitled “Save our Homes.” This amendment was passed in response to skyrocketing home values which made it difficult for long time homeowners to keep pace with taxable values as their homes appreciated over time. Save Our Homes limits tax increases to no more than 3% per year for permanent Florida residents on their primary home regardless of real estate market appreciation. With the current approach, new homeowners will frequently pay much higher property taxes that their long time neighbors. Under the new constitutional amendment, if passed, homeowners would chose between the “Save our Homes” approach with the limited $25,000 exemption and the supersized exemption approach. The Save our Home approach would not be available to homeowners if they chose to sell their current property.

hich of these approached is best for you personally? This is a good discussion for your tax or financial advisor if the January amendment is passed. Through the first quarter of 2007, the 5 year appreciation rate for Florida houses was 102.12% as reported by the Office of Federal Housing Enterprise, a federal government agency. The cap offered by Save Your Home is considerable less. Which is best for you in the future depends on how long you’ve been in your current house, how long you intend to stay before you sell, and what own predictions about Florida’s future real estate market appreciation rates.

he effect of the recent legislative changes really does depend on you and your individual situation as well as your vote on January 29. Look for much debate and discussion as the vote approaches. If you have additional questions about this or other real estate issues, call My Lakeland realtor, John Carter at (863) 529-7488.

What is "TRIM"?

Truth in Millage report published by the county's tax appraiser's office annually in August. This report provides detailed information on estimated taxes for each taxing authority in your county.

or call (863) 529-7488

John Carter is a Coldwell Banker Realtor in Polk County Florida specializing in residential sales.