Lower Property Value Does Not Always Mean Lower Taxes

Saturday, the Sarasota Herald Tribune ran an article written by Doug Sword regarding decreased property values with increased taxes for full-time Florida residents.

 The article read:

 “Last year’s decline will cut total taxes paid by property owners in the region by more than $100 million, but will also cut deeper into the budgets of struggling local governments. And while property taxes are based on property values, for many homeowners these historic declines will not translate into tax cuts. Instead, when tax bills go out in November some homeowners will get hit with a double whammy — a tax increase despite a drop in the value of their property.

 That seeming contradiction is due to the Save Our Homes exemption, which was intended to keep the taxes of full-time residents down by capping the amount they could increase each year.

 But the biggest tax reforms were not the result of anything done in Tallahassee. Instead, they were meted out by the market, which in the last two years erased 75 percent of the Save Our Homes benefit once enjoyed by residents in Sarasota, Manatee and Charlotte counties. And now, because of Save Our Homes, non-residents are getting the big tax cuts while residents are seeing increases, although usually small ones.

The benefit for full-time residents came into being in 1995 after Florida voters approved a change in the Constitution. Save Our Homes caps how quickly the assessed value of a home can grow, limiting it to 3 percent or less even during years when property values and tax bills soared by 20 percent or more. Because of the cap, it became common to see homes with a market value of $300,000 assessed for tax purposes at $150,000 or less. That led to situations where identical homes owned by neighbors were taxed at very different levels.

 But as the market dropped, the Save Our Homes benefit has dropped 75 percent, to $7 billion, in the last three years. Meanwhile, part-time residents have seen their tax bills go down.”

 For more information regarding the “Save Our Home” legislation, please contact our office.

 To view the full article, visit http://www.heraldtribune.com/article/20090704/ARTICLE/907041045

 Posted By Karen Gagliardi, Berlin Law Firm, Business Development Coordinator.