Tax plan could stimulate real estate market
By Louise Bolger
sun staff writer
What do Floridians like to talk about the most? Real estate, hurricanes and property taxes, and it’s no coincidence that these three topics are linked in perpetuity. Significant changes in one of these areas can have a positive or negative affect on the others. Although the proposed property tax amendment just agreed to by the Florida House and Senate may not have much of an affect on next year’s hurricane season, it could have a tremendous affect on next year’s real estate season.
After weeks of bickering in Tallahssee, last week both the Florida House and Senate agreed on a property tax relief plan to be placed on the Jan. 29 ballot.
Basically it boils down to three proposed changes: Doubling the $25,000 homestead exemption enjoyed by homesteaded property owners to $50,000, resulting in approximately a $240 annual savings; permitting a so called portability provision for homesteaded property owners who want to move and retain their current homestead exemption; and capping non-homesteaded property at a 10 percent assessment rate.
What does this all mean for the real estate market? First of all any property tax change is better than no property tax change, so I’m personally delighted that something was settled on. Since I’m sure all members of the legislature feared for their safety if they closed the special session without an agreement, it was kind of a sure thing something would be approved.
Doubling the $25,000 homestead exemption, which does not impact school taxes, so it’s not really double, is a nice little bone to toss to Florida residents, but it won’t make much difference to new buyers moving into the state. It might, however, help the proposal pass in January, which is a good thing.
The portability proposal is a very good thing. Although it’s capped at $500,000, it will still get many homeowners in gear who have been reluctant to move up or down because of the increased property taxes they would face. It’s not going to instantly turn our market around, but it will slowly get everyone thinking of the possibility of making a move.
However, in my opinion, the best part of the proposal is the 10 percent cap for non-homesteaded owners who are vital to the health of Florida real estate. This will really get the ball rolling for second home buyers and investors. The fact that this proposal comes at a time when our real estate market is in a down turn makes it even sweeter. Smart buyers will start jumping in and buying reduced properties and then wait for the inevitable appreciating market on the horizon, knowing their property tax liability will be able to withstand an increase in assessed value. Unfortunately, the tax proposal doesn’t help non-homesteaded owners who have owned for the last five to seven years. No provision was made in the proposal to reduce these owners’ inequitable tax burden, however, they will benefit if their properties continue to appreciate.
The tax proposal is not perfect and it’s not going to make non-homesteaded owners happy, but it is a start and enough of a change to have a gradual affect. The important thing, however, is to get it passed in January. 60 percent of Florida voters have to approve the amendment, which is a good possibility, since it has benefits to the voting homesteaded residents.
We managed another year without hurricanes, and the property tax proposal, if passed, is a step in the right direction. Hopefully, the cumulative affect of these will positively impact the real estate market and give us all something to talk about.