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Homebuyers need help clearing fog on tax bill

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By MARY JO MELONE, Times Staff Writer
© St. Petersburg Times
published September 14, 2003

In August, I wrote about the homebuyer's version of sticker shock - the unhappy experience of discovering that the taxes on the house I bought earlier this year were 150 percent more than I thought they would be.

My real estate agent was not pleased. She was insistent. I had been told from the get-go what the taxes would be, she said.

So I pulled out that fat file of papers created by the closing. Sure enough, my agent was right. I had been told what the taxes would be.

But there were two different figures, on different pieces of paper, dated on different days. The taxes were for different years, this year and next.

The information on next year's taxes - when they will be so high - was prepared by the mortgage broker and contained in documents I was given around the time I signed the contract to buy the house.

The information on this year's taxes came from the lender and was contained in records I got at closing five weeks later.

I never noticed those discrepancies or asked what they meant.

Eight months passed. August came around and with it, the county's TRIM notice that showed this year's taxes and next year's. The two numbers that had been deep in my file were suddenly side by side.

I failed, I guess, to do all the appropriate digging through my file to figure this stuff out at the start. But I doubt many people would have done better. If you have bought a house, you know. There's no event more emotional, unless you count your wedding.

You sign papers upon papers without looking at the fine print. If you looked at the fine print, you'd still be signing at midnight. Somebody in the room inevitably makes the stale joke about signing away his life or his first born. The real estate agents themselves are apologetic. They wish the process were more streamlined.

There was nothing nefarious about the process I went through - unless you're counting the confusion caused by Save Our Homes, the constitutional amendment that governs the way our homes are taxed.

This is how it works. From year to year, the taxable value of your home cannot go up more than 3 percent or the increase in the cost of living, whichever is less. Your property taxes are held down accordingly. But when the house is sold, the home is reassessed at or close to the sale price. Boom - the taxes shoot up.

There is a formula to figure out the bill before you get clubbed by the numbers. To be safe and plan for the worst when you're looking at a house to buy, take the purchase price, deduct $25,000 for your homestead exemption, and then multiply the resulting figure by your total tax or millage rate. The result will be an approximation of your tax bill, the figure you should factor in when trying to determine whether you have found a house that fits your budget.

This process shouldn't be so hard. You ought to be able to know what your taxes are, how they will go up and why. You ought to know sooner, not later.

This is not just my gripe. It is the position of the state Department of Revenue, which tried this year to get a bill through the Legislature to achieve that goal.

There were a couple versions of the legislation. In one, it was up to the real estate agent to give the buyer a heads-up on the tax increase. In another version, it was up to the agent and the seller. In still another version, it wasn't clear who had to make the disclosure, which wouldn't occur until closing.

The bills were criticized by Realtors and didn't survive in committee, although the industry's Tallahassee lobbyist, Gene Adams, told me he's prepared to try again in sessions to come. He admits there's a problem in need of fixing. Disclosure of how Save Our Homes works when homes are sold would add more paper in need of signing to the process of buying a house. But it would be a small price to pay for clarity and understanding.

- Mary Jo Melone can be reached at mjmelone@sptimes.com or 813226-3402.


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