Homeowners must choose their exemption
By Louise Bolger
sun staff writer
I’ve been holding back over the past several weeks, just reading about and listening to all the conversations swirling around the proposed constitutional amendment better known as the super exemption tax plan. But it is July 4 and unless my history is really rusty, I think we fought a revolution that had something to do with taxation without representation. So maybe it’s about time to channel the rebel in me.
The tax cut package is in two parts. Phase one has been passed by the Florida lawmakers and is effective with the 2007-2008 budget year beginning Oct. 1. This will hold taxes to the 2006-07 level and roll back a little extra. The average homeowner savings is somewhere between $174 and $199, depending on homestead status.
The second phase requires a constitutional amendment change and will be voted on Jan. 29. This is by far the more important of the two phases and the one that will impact heavily on homeowners and local governments.
Its real purpose is to phase out the Save Our Homes amendment for homesteaded homeowners and replace it with the super exemption that would become effective for homes purchased on or after Jan. 1, 2008.
If the amendment passes, homesteaded homeowners will have the opportunity to choose between keeping their Save Our Home exemption, which will not change their taxes and retain their 3 percent annual cap, or sign on for the super exemption.
If you elect the super exemption, you cannot go back to Save Our Homes, and although you’re taxes could be substantially reduced, there are no annual protective caps.
Most homesteaded homeowners who own their homes five years or more will probably be better off retaining their Save Our Homes status. Those who purchased most recently will receive greater benefit.
For example, if you purchased a home this year with a taxable value of $500,000, you will be paying about $8,000 in taxes, depending on where your home is located. If you choose the super exemption, your taxes would drop to a little over $5,000.
Sounds great, right, and it is for a lot of people, but the proposed amendment does nothing for non-homesteaded homeowners, who have been on tax overload during the past five years.
The proposed amendment also does not provide for portability, the ability for long-time homestead homeowners to keep their exemptions when they move on to another property. Although the super exemption will reduce overall taxes, most homesteaded homeowners will still pay substantially more in taxes if they make a lateral move.
What does all this mean to the real estate buyers who are standing on the sidelines waiting to see which direction the ball will be passed? In my opinion, it means they’re not running for the home purchase goal line. Buyers of seasonal properties, investors and potential move-up buyers will gain little or nothing if this amendment passes.
New home buyers and first-time buyers who are planning on homesteading will be in a better tax position. This segment of the market place could see more activity, but chances are most of these buyers would have bought anyway.
The real kicker, is that homeowners who have the most to gain are the ones who will vote in January, non-homesteaded owners can’t vote. I don’t think we need a Las Vegas bookie to figure the odds on the outcome.
Although Save Our Homes turned out to be far from fair or perfect, replacing it with an equally unfair system accomplishes nothing. Let’s send our legislators back to the drawing boards before we have to fight another revolution. Happy July 4.