New property tax amendments coming
Has there ever been a time since the creation of civilized societies that people haven’t talked about, revolted against and thoroughly despised taxes in all forms? Since I don’t expect this will change any time soon, the best we can do is stay informed and vote for or against proposed changes in the tax structure given the opportunity. In November of next year, there are proposed tax related amendment changes to the state constitution being placed on the ballot to consider and vote on.
The primary proposed amendment would lower the cap on annual assessment increases from 5 to 10 percent for properties other than primary homes including businesses, rental properties and vacation homes. The new cap would not, however, apply to school taxes. Currently homesteaded properties have a 3 percent cap under the Save Our Homes amendment, and if this amendment passes, it would create a taxing plan similar for non-homesteaded properties.
Also as part of the proposed amendment, an additional exemption of 25 percent up to a maximum of $100,000 would be offered to buyers of primary homes who have not owned one for the previous eight years. This would benefit buyers who purchase a $200,000 home approximately $1,000 annually, phasing out over five years, and is about half of what the original legislation asked for. There is also a bill on the ballot relative to making it easier for taxpayers to challenge property tax assessments.
Property tax bills that did not pass included an amendment to limit annual property taxes to 1.35 percent of the highest taxable value of a home, business or other real estate. Also not on the ballot is a proposal that would prevent a homeowner’s property tax assessment from going up as much as 3 percent when the home’s market value drops, now allowed by what’s known as the "recapture rule."
Naturally, there are opinions on both sides of the issue. The proponents of the bill claim it will further encourage buyers to make positive buying decisions in a market with some of the lowest asking prices in better than five years and the best interest rates in a decade. It will be particularly advantageous for first time buyers, who may also benefit from an $8,000 federal tax credit, and second home and investors, who will benefit from a cap on property taxes when values start going up again.
Local governments that have been cutting budgets to the bone in the wake of the housing crisis will inevitably be against any amendments that further erode their tax base. However, the sponsor of one of the amendments, Rep. Carl Domino, R-Jupiter, feels it could encourage enough real estate purchases that it will ward off further declines in values. This would result in fewer empty homes and the lack of taxes associated with them, ultimately making up for the initial loss of taxes.
Sixty percent of voters need to approve the amendments for them to become law, and if approved, the tax benefits would apply starting in 2011. I’m sure there will be plenty reported and written about the pros and cons of these amendments between now and November 2010.
Taxes are, of course, a necessary part of running government and providing services to citizens. However, the level of taxation and distribution of taxes collected will always be a point of contention. Most citizens vote for what is in their best interests, but sometimes you need to vote for what is in the best interest of the community as a whole.