Realty Blog

Part one (HB 1B, SB 2B)

Cuts the 2007-08 budget for nearly every special district, municipality and county next year by either 3, 5, 7 or 9 percent.

• Requires a 3 percent cut in the 2007-08 budgets of special districts known as municipal service taxing units, which provide medical or fire rescue services.

• Lets local governments avoid the cut and collect the same amount of property taxes as this year with a two-thirds vote of the governmental body.

• Lets local governments use the same tax rate as this year, which would result in more revenues due to increased values and new construction, with a unanimous vote.

• Requires a referendum to increase both revenues and the tax rate for 2007-2008.

• Requires the state to tell local governments by June 25 how much property taxes need to be cut, and requires the property appraiser to provide local governments with instructions about how to compute new tax rates.

• Requires local governments to verify the amount cut back to the state by July 2 or risk having elected local officials removed from office by the governor.

• Starting in 2009, caps property tax revenues for local governments at the rate of personal income growth in the state, which has averaged 4.2 percent during the past 20 years.

• Exempts special districts and municipalities less than five years old from the cap.

• For the 2008-09 budget, local governments would need a two-thirds vote to increase the cap by 67 percent of the rate of personal income growth. For example, if the rate was 3 percent, a two-thirds vote would be needed to increase that cap to 5 percent.

• For 2009-10 and future years, local governments would need a two-thirds vote to increase the cap to 10 percent.

• All local governments except those with boards of nine members or more require a unanimous vote of the governmental body or a referendum of the people to increase beyond 10 percent. Local governments with nine members or more would need a three-fourths majority to exceed the revenue cap beyond 10 percent.

• Withholds a half-cent sales tax for one year from local governments that violate the cap without a proper vote, unless local governments reduce the tax rate upon notification by the state.

• In the case of an improper tax increase, requires the tax collector to hold revenues that exceed the cap. Those revenues would be used the next year to reduce the tax rate.

• Requires governments to hold a hearing within 15 days of being notified of by the state of being in violation of the cap.

• Lets the director of the state Department of Revenue adopt emergency rules related to the changes or give local governments up to 21 additional days to comply with the changes this year.

• Removes protections from the tax cut for land-poor cities known as a municipality of special financial concern. Does not affect any cities in Palm Beach, Martin or St. Lucie counties.

• Exempts counties with a hospital surtax from reducing the tax rate that pays for a county public hospital. Applies to Miami-Dade County's Jackson Memorial Hospital.

Part two (HJR 3B, SJR 4B)

• Phases out Save Our Homes protections in exchange for increasing the $25,000 homestead exemption to 75 percent of the first $200,000 of home value plus 15 percent of the value from $200,001 to $500,000.

• Increases the $500,000 threshold by the rate of personal income growth each year.

• Lets the legislature increase the $500,000 threshold with a two-thirds vote.

• Sets the minimum exemption at $50,000.

• Gives low-income seniors a minimum exemption of $100,000.

• Gives businesses a $25,000 exemption for tangible personal property.

• Allows current homesteaders the choice of keeping their Save Our Homes benefits as long as they own their current home or of switching to the new 'super' exemption, regardless of which provides a greater tax savings. However, any switch to the new exemption is irrevocable.

• Land owned by a community land trust and used to provide affordable housing would be assessed based on the sale price, not on potential use.

• Creates an application process to classify property as workforce and affordable rental housing property. Such property would be assessed based on generated income.

• Penalizes owners who misrepresent their property as workforce or affordable rental housing with an interest rate of 15 percent on taxes due plus 50 percent of the taxes due.

• Lets lawmakers change how working waterfronts are assessed.

• To go into effect, still needs 60 percent of the vote in the statewide presidential primaries Jan. 29.

Phase one of Florida's Property Tax Reform is now law after Gov. Charlie Crist signed a bill on Thursdy. The first phase keeps taxes the same next year and, on top of that offers additional savings of about 6 or 7 percent to all property owners/homesteaders, second homeowners and commercial property. Also, local governments can no longer increase revenue simply by keeping millage rates the same as property values rise, local tax increases are now tied to area incomes and growth. If local lawmakers wish to override that limit, they must vote to do so. Voters will decide phase two, which primarily benefits homesteaded owners, during the January 2007 primary election.

June 25, 2007 Florida Real Estate Headlines / Florida Association of Realtors

The Special Session began yesterday and bills were finally released for the first time outlining a basic agreement between Senate and House Republican Leadership on tax reform. We are analyzing the proposals, HB 1B and HB 3B, and working on a "pros and cons" document of the plan that we will share with you as soon as possible. We want everyone to be fully informed prior to a call-to-action.

The attached documents are newly released and help to explain the plan in detail. A quick summary is that the plan does away with the current system of Save Our Homes (SOH), replacing it with a "super-homestead" exemption. If you have a greater benefit under the current SOH system, you would be grandfathered in and retain that benefit until you sell.

The new "super-homestead" exemption would exempt 75 percent of a home's value up to $200,000 and 15 percent of a home's value up to $500,000, for a maximum homestead exemption of $195,000. The minimum homestead exemption would be raised to $50,000. The $500,000 threshold would increase by personal income growth so as to keep up with inflation and allow for greater amounts - and would also be allowed to be increased by a 2/3 vote of the Legislature. This new "super-homestead" exemption would apply to school property taxes as well, which is why some legislators do not approve of the measure.

As for Non-homesteaded property, the savings come from the statutory rollback to 2006 tax collections, PLUS a minimum 3 percent reduction in ALL taxes except schools. If your local government has been less fiscally responsible over the last 5 years, their percentage reduction is greater (up to 9 percent). Please see the attachment titled "County Roll Back Groups" to see where Palm Beach County lies.

The plan also seeks authority from the voters next January to address assessment method changes for affordable housing and working waterfront properties. Local governments' overall property tax revenue would also be capped starting next year, so that overall increases in property taxes will be held in check. However, all of these rollbacks and caps can be overridden by an extraordinary vote of the governing body, but in extreme cases will need voter approval.

Also important to Realtors and other businesses is the $25,000 exemption for tangible personal property that has been agreed to as part of the plan. This will result in approximately 1 million of Florida's 1.3 million businesses not having to even file this tax, and realize savings of about $500.00 for those who do.

This is the basics of the tax plan which will likely change over the next few days. We will update the membership when new information is released.

June 7, 2007 HEADLINE NEWS from the Florida Association of Realtors.

House and Senate leaders agreed last Friday on a blueprint for property tax reform for florida lawmakers to consider during a special session June12-22. The plan calls for immediate and long-term tax relief:

IMMEDIATE: Require cities and counties to cut property taxes based on a formula tied to how much they've increased taxes in the past. The lower rates would take effect with the November property tax bill. Areas where taxes have grown the most on a per capita basis would be required to cut taxes the most. Conversely, cities and counties with the lowest increases would face the smallest cuts.

LONG-TERM:Voters would have to approve a plan to replace Save Our Homes and the homestead exemption with a tiered, percentage-based super exemption. For instance, the first $100,000 of a home's value might be 70% exempt, the next $100,000 would be 50% exempt, and so on. Homeowners would be able to keep their Save Our Homes benefits (3% cap annually) if that yields greater savings than the super exemption.

STILL UNDECIDED: A tax relief plan for elderly, commercial and non-homestead (second and vacation) property owners, as well as tax incentives for affordable housing. For commercial property owners, FAR recommends the Legislature place a 10% cap on yearly assessments for non-homestead property and assess property based on its "present use", not "highest and best use".

For more information and monitor updates go to (floridarealtors.org)  Legislative Center.