The URL can be used to link to this page

Home My WebLink AboutHandouts_Regular_07/13/2006 (2) * - Florida Associatiorr of F�ealtors�'s (FAR) position on property tax portability Rep. Domino came to (FAR) with his bill initially in 2003. Back then, property tax portability was a new idea in Florida, but research showed that it has occurred in counties in California since the adoption of their version of "Save Our Homes" in 1978 (known as Proposition 13, I believe). In 2004, Rep. Domino's bill was never heard in a committee of the Legislature and died there again in 2004. Realtors expressed concern over "statewide portability", and decided that fairness, as well as the pressure local governments would put on impact fees and a local option documentary stamp tax outweighed the advantages of portability. In 2005, (FAR) set up a tax working group which continued to discuss these issues. As the issue became hotter, more Realtors began to discuss and advocate for portability, especially from South Florida. At the end of 2Q05, (FAR)'s Board of Directors approved money to be spent on at least one comprehensive study of statewide portability. In December, (FAR) received the results of two studies, which indicated that there is a "lock in effect" — consisting of about 2 years of extra time spent in a home per $2,000 of tax savings. We also found that about 2/3 of all Florida moves are within the same "geographical area". Potential lost revenues to local governments range from $479.2 million to $868.6 million in 2010. With these thoughts in mind, the new 2006 (FAR) State and Local Taxation Subcommittee was assembled and charged with evaluating and advising (FAR) of any needed changes to policy. Ultimately, the committee decided on limited portability by county option, and the following statement ended up passing (FAR)'s BOD in January: The Florida Association of Realtors� supports a limited proposed constitutional amendment that would authorize county governments to allow "portability" for homeowners who are either upsizing or dawnsizing. (FAR) also supports allowing homeowners to move Save Our Homes tax savings to new homes when they are forced from their existing homes by the exercise of eminent domain (FAR) also supports allowing homeowners to repair and replace homes damaged in casualty events without losing the Save Our Homes tax savings (FAR) cautions that school taxes may require different tax treatment to avoid disequalization of school funding. (FAR) fought long and hard on portability this Session, and it was the issue we in Tallahassee testified in front of committees the mast. Though subject to change, (�AR) is working to have a member named to the newly created Governor's Property Tax Reform Committee, as well as the Tax and Budget Reform Comrnission next year. Trey Price Public Policy Representative Florida Association of Realtors� Tallahassee, Florida (850) 224-1400 _ w POTENTIAL GUIDING PRINCIPLES FOR PROPERTY TAX RELIEF 1. The problem being addressed should be documented, not based upon anecdotal evidence. 2. Relief should be targeted to address the documented problem. 3. Floridians should not be taxed out of their homes. 4. Homeowners should be free to buy and sell properties and not feel place-bound by artificial tax constraints. 5. Property tax relief should not unduly shift the property tax burden onto non-homestead properties, including first-time homebuyers, renters, second home buyers, commercial and industrial properties. 6. Property tax relief should not distort the market for sales of properties. 7. Property tax relief should not cripple local governments and schools. 8. Property tax relief should not unduly shift the tax burden onto a narrow group of taxpayers (i.e., documentary stamp tax increases). 9. Affordable housing and the needs of a first-time homebuyer must be considered. 10. The impact of different property tax burdens across similarly-situated homeowners should not be ignored. I • PROPERTY TAX RELIEF ALTERNATIVES I. Identify the Problem to be Addressed: A. Property taxes on all types of property are tao high B. Property taxes on residential properiy are too high C. Property taxes on residential properiy in sorne areas of state are too high D. Save Our Homes inhibits sales of homes generally E. Save Our Homes inhibits downsizing to smaller homes F. Florida needs a targeted solution to property ta�c issues arising from hurricane damage or eminent domain G. Property taxes are generally acceptable, but property values �.nd assesssments are rising too fast II. Potential Alternatives for Addressing the Problem: A. Property taxes on all types of property are too high 1. Legislature can limit increases in property taxes 2. Legislatwe can limit increases in property taxes in exchange for loosening strings on other taxes (i.e., remove referenda on sales tax) 3. Constitution can be amended to cap property taxes B. Property taxes on residential property are too high 1. Legislature can limit increases in property taxes via either mandate or incentive, as noted in A.1.and 2. above 2. Constitution can be amended to increase the homestead exemption 3. Constitution can be amended to allow Legislature to grant residential properiy tax relief without granting property tax relief across the board 4. Save Our Homes exemption amount could be capped at specified amount (i.e. $SOQ,000 or $1 million) to limit shifting of tax burden onto non-homestead properties C. Property taxes on residential property in some areas of state are too high 1. Legislature can incentivize local governments to trade reliance on property tax for reliance on other sources by loosening strings on other taxes (i,e., remove referenda on sales tax) . . 1 2. Legislature can authorize other replacement sources as incentive to reducing reliance on property tax 3. Legislature can loosen requirements on existing property tax deferral program to make it rnore attractive D. Save Our Homes inhibits sales of homes generally 1. Legislature can authorize portability of SOH exemption amount a. Exempt amount could be capped at specified amount to limit shifting of burden onto non-homestead properties b. Could limit portability of SOH to within one county c. Could limit portability of �OH to situations in which property owner would not pay less tax in year after move than paid in year of move 2. Constitution could be amended to replace SOH with alternative properiy tax relief that does not impact the marketability of housing E. Save Our Homes inhibits downsizing to smaller, less expensive homes 1. Legislature can authorize portability of SOH exemption amount a. Limits in d. l. could apply 2. Constitution could be amended to replace SOH with alternative property tax relief that does not impact the marketability of housing F. Florida needs a targeted solution to hurricane damage and eminent domain l. Legislature can amend SOH to address preservation of SOH advantage for improvements required by natural disaster. Z. Constitution can be amended to ensure SOH treatment for properties that lost homestead status due to natural disaster or eminent domain G. Property values, and therefore assessments, are rising too fast 1. Amend the constitution to limit annual increases in property tax assessments for all types of property . . PORTABII..TTY STUDiES � Average just value homestead in 2005 $190,580 Average assessed value homestead in 2005 $132,416 For every $2,000 tax savings per year, homestead would on average increase tenure by about 2 years Two-thirds of moves have been in same geographic area , 60% of homebuyers eligible to use H1R 33 portability (29°fo l time home buyers) 90% of eligible buyers would transfer all or part of reduced assessment value 50% of homes purchased each year will be able to transfer full average reduction in assessment Given inflation around 3% per year, if millage rates held constant, counties would still have real dollar increases in property tax collections even with portability If inflation increases to higher than 4%, cities and counties would have to raise millage rates to maintain same purchasing power If cap was inflation, instead of lesser of inflation or three percent, assessments could rise with inflation and threat to local governments of high inflation would be cancelled (although taxpayers would have risk of higher taxes) Florida's potential reduction of property tax revenues ranges from $479.2 to $868.6 million in 2010 and $1,100.7 to $4,732.4 million in 2020 (Allen study numbers lower in earlier years, but increase quickly)