How Will the Passage of the Property Tax Amendment Affect Your Tax Bill?
Feb 6, 2008
Now that voters have passed the property tax amendment, how much impact will it really have?
For starters, every homestead owner will save a couple hundred dollars, thanks to the increased homestead exemption. Currently, the first $25,000 in home value is entirely exempt from taxation. Now, the home value between $50,000 and $75,000 is exempt, but not from school taxes. So the actual increase in the value of the exemption is about 60% on properties worth $75,000 or more, resulting in a savings of approximately $240 per homestead.
The biggest change is the creation of portability for the Save Our Homes cap on taxable property value. The Save Our Homes provision protects homestead owners by allowing no more than a 3% increase in the assessed taxable value each year, even if market value increases much more than that. Before the passage of the amendment, if a homestead owner sold the home, the tax savings created by the Save Our Homes cap was lost, and the owner had to start out in a new home assessed at current market value. Portability allows homeowners to purchase a new house without losing their accrued tax savings. For example, if the existing home is worth $500,000 but has a taxable value of $200,000 because of the Save Our Homes cap, that $300,000 difference would be deducted from the taxable value of a new home, resulting in a substantially lower tax bill than without portability.
The amendment also contained a 10% cap on the annual increase in taxable value of all non-homesteaded property, including commercial property, rental property, and second homes. This new cap is intended to prevent dramatic tax increases during times of rapid price escalation in the real estate market.
While this may be the last we'll hear from the legislature for now, the Florida Taxation and Budget Reform Commission is currently meeting and could put more far-reaching reforms on the ballot next November.
The FTBRC is a constitutionally-mandated commission that meets every 20 years to examine the state's budget and tax structure. It has the authority to place proposed constitutional amendments on the ballot without the approval of the legislature or governor. We will keep you informed of the progress of the FTBRC. You can learn more at the official FTBRC website.