Property taxes: The Ball is in Our Court

Real Estate Taxes and how they will impact your future .

Most of the time what goes on in Tallahassee seems far removed from our daily lives. For the 70 percent of us who own a home, however, now is the time to pay attention. Growth is a two-edged sword, and our Florida State Congress has been trying to come up with a solution to the property tax crisis created by the massive appreciation we have all benefited from the last few years.

On June 14, 2007 the Florida Legislature passed new legislation regarding property taxes. These changes come in two “chapters”. The first is referred to as House Joint Resolution 1B, or HJR1B for short. HJR1B, by Representative Attkisson, is an immediate statutory relief and has several provisions that are beneficial, but are noise level at best.

Though HJR1B is worthy of notation, the real “meat and potatoes” fall under Representative Cannon’s “Property Tax: Constitutional Relief and Reform” or HJR3B and will be the focus of the remainder of this article. The changes, if the amendment passes on January 29, 2008, are as follows:

Current property owners will have the ability to choose how their property will be taxed. They can stay with the current "Save Our Homes" Exemption or replace it with the new "Super Exemption." Here is how the latter will work:

Level 1: Homesteaded property will receive an exemption of 75 percent of the first $200,000 in value of the home. The minimum exemption is $50,000 per homestead.

Level 2: In addition to Level 1, homestead property will obtain another 15 percent exemption for the next $300,000 in value.

For Part II, be sure to visit next issue or go to www.OrlandoMortgagePro.com

HJR3B also offers incentives for affordable housing and small businesses will receive a $25,000 tangible personal property tax (TPP) exemption. This will result in a total exemption for 1 million of the 1.3 million businesses that must pay this tax.

As I stated, the initial "au tom atic" tax relief will not be that significant. However, if the constitutional amendment passes this coming January, the result will be very significant for the majority of homebuyers.

For example, let’s take a new homebuyer purchasing a home in Seminole County with an assessed/just market value of approximately $250,000. Under the current system, a homesteaded property would then be assessed taxes based on a taxable value of $225,000. At current millage rates, this results in property taxes of approximately $3,800 per year.

Under the new proposal, the first $200,000 of assessed value would be granted an exemption of $150,000, leaving only $50,000 in taxable value. The remaining $50,000 would receive an additional exemption of $7,500. Therefore, the new taxable value under this scenario would end up being only $92,500, resulting in total property taxes of only about $1,560 per year. This is $2,240 less per year, or $187 less in total monthly mortgage payments compared to what we have today. Now, that is money to take to the bank! (Not to get too far off the topic, but $187 a month invested in the stock market making around 8 percent for 30 years would create an additional net worth of over $250,000!) Significant? Yes.

The main point not to be missed about the amendment is that it must be voted in to take affect. Rest assured that there will be fierce competition over the airwaves, both for and against, as the time approaches. The best way to battle through it is to become and stay informed.

Links of interest:

Details of HJR1B & HJR3B:

www.OrlandoMortgagePro.com/Property_Tax_Update.htm

Video clip of House Speaker Marco Rubio:

http://cbs4.com/video/?id=36782@wfor.dayport.com

Run the analysis on your house:

http://www.scpafl.org/web/web_main.main

Other: