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CAN ALERT: How Well Do You Understand the New Property Tax Reform Proposals?

Dear

In the June, 2007 Special Session, the Florida Legislature passed two pieces of legislation in an attempt to improve the property tax burden of our citizens. House Bill 1-B (HB1-B) requires Florida counties, cities and several other taxing authorities to lower their tax rates by a certain percentage based on their past taxing history. The school districts (which account for almost 40% of your annual tax bill)are NOT required to make any budget cuts under HB 1-B. The 2007 tax cut is expected to provide only minor relief.

What exactly then, does HB 1-B do for Florida's real property owners?

-HB 1-B requires all cities, counties and special taxing districts to calculate the "rolled-back rate" for this fiscal year. That means, in plain English, that the total tax collected by each taxing authority for fiscal year 2007-2008 must not exceed the amount from last year (fiscal year 2006-2007). This rolled-back rate does NOT apply to new construction which was not on last year's tax roll.

-After calculating the rolled-back rate, each city and county must further reduce taxes based on its recent taxing history from 2001-2006 in relation to the statewide averages during that time period. Those taxing authorities who increased taxes at a faster rate than the statewide average will be forced to make larger tax cuts.

-Beginning next year and continuing for each year thereafter, all local taxing authorities (except for school districts) must set millage rates based upon the rolled-back rate, adjusted by population growth and the annual growth of Florida personal income. A taxing authority may override this cap requirement by a super-majority vote, a unanimous vote or a public referendum which makes such an override unlikely.

-HB-1B does NOT provide for tax refunds for any past years.

In addition to HB 1-B, the Florida Legislature approved a proposed constitutional amendment which will appear on the Presidential primary ballot on January 29, 2008. Floridians will be asked to vote on several items under this amendment including the "Super Exemption" for homesteaded properties. Currently, the Homestead Exemption exempts the first $25,000 of value from the annual tax bill of homesteaded properties. The Florida Constitution also provides "Save Our Homes" protection to all homesteaded properties by insuring that the annual assessment for tax purposes cannot increase more than 3% per year regardless of how much the real property increased in actual market value.

If the proposed constitutional amendment passes, only current homesteaded owners would be allowed to keep the Save Our Homes protection (and would only be able to keep such protection on existing homesteaded property). Over time, the Save Our Homes protection would naturally be phased out as people sell, die or move.

The "Super Exemption" would exempt 75% of the first $200,000 of market value of your home, in addition to exempting 15% of the next $300,000 in market value. The maximum protection afforded by the Super Exemption is $195,000 of assessed value. The proposed constitutional amendment does NOT contain any annual assessment cap so an owner's homesteaded tax assessment would continue to increase each year to match the full market value.

Most people will simply want to know whether they will save more money under the Save Our Homes 3% cap or with the Super Exemption. The real answer depends on your specific circumstances.  A new purchaser could initially save more with the Super Exemption but is gambling in terms of market value increases over time. Owners who have been in their homes for some time may decide that the current cap continues to provide them with the best savings.

The proposed constitutional amendment does not provide any benefits to tenants, commercial property owners or non-homesteaded owners. If voters reject this amendment in January, 2008, the current Homestead Exemption and Save Our Homes protection will simply remain intact. The Florida Legislature will then have an opportunity during the 2008 Session to propose a different approach.

If you would like to suggest such an approach or weigh in with your public policy makers, please use the Capitol Connection email tool on the CAN website at http://www.canfl.com and click on the Capitol Connection tab. You can quickly email all 160 members of the Florida Legislature with just one click. If you have forgotten or don't know your password to log on to the site, please email my assistant, Cherell, at cmurphy-jones@katzkorr.com and she will provide it to you.

While on the site, please make sure to click on the Upcoming Meetings link as there are some free condominium workshops that might interest you. Also, please click on the Affinity Program link to see what new vendors have signed up to offer discounts and special services to our CAN members.

I hope you have found this information to be useful and, as always, I look forward to hearing from you on this and other issues of concern to community association residents. To those of you celebrating Rosh Hashanah, have a happy and healthy new year!

Best Regards,
		
Donna D. Berger, Esq.
Executive Director of the Community Advocacy Network (CAN)
Telephone: 954.486.7774 
Facsimile:   954.486.7782
Web: http://www.canfl.com
Email: dberger@canfl.com

For more information, please contact Donna Berger at 954-486-7774 or via email at dberger@canfl.com