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Florida Legislature 2005 (click for ongoing coverage)

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Proposal allows property tax break

People could trade up in the home market without bearing the full brunt of a tax increase, under a plan to expand the Save Our Homes amendment.

By JONI JAMES
Published March 16, 2005

TALLAHASSEE - Looking for a nicer home? Some Florida lawmakers want to help.

Saying taxes can make it too expensive for some Florida homeowners to buy a nicer home, a Senate committee Tuesday approved 4-2 a plan to ask voters to let homeowners keep their property tax savings when they buy a new home.

Under the proposal, pushed unsuccessfully last year by Rep. Carl Domino, R-Jupiter, the taxable value of their home would apply to the next home they buy.

"This is just common sense property tax relief," said Senate sponsor Mike Haridopolous, R-Melbourne, as he introduced the proposed ballot measure Tuesday to the Senate Community Affairs Committee. "There are literally people who cannot afford to move because of the new tax at the new location."

The proposal expands a 1994 constitutional amendment known as Save Our Homes that capped the annual increase in assessed value for owner-occupied homes at 3 percent.

The idea was to keep homeowners from being taxed out of their homes when property values rise in their neighborhoods. Homeowners who sell and then buy another home must pay taxes based on the full value of their new house.

That means a much bigger tax bill.

The new proposal would offer relief to homeowners, but at a hefty price to local governments.

Legislative economists estimate it could cost local governments as much as $1.3-billion in its first five years. Haridopolous says that estimate is overstated. Property taxes account for 30 percent of the revenue for counties and 24 percent for cities.

"The solution is very attractive, it's just the problems it creates are not," Sarah Bleakley, lobbyist for the Florida Association of Counties, told the committee.

Critics say the plan also would increase property tax disparities. Commercial and residential rental property owners pay higher taxes because their property values are not capped. The plan could also lead to disparities between two neighbors who may have bought identical houses on the same day.

Here's how it would work: A homeowner with a house valued for taxes at $100,000 sells for $300,000. The seller buys a new home for $500,000. Under Domino's plan, their new house's property taxes would be based on a taxable value of $300,000 - the difference between the market value of the two homes, plus the taxable value of the first home.

The result, in this hypothetical case, is a 40 percent savings. The plan applies only to owner-occupied homes bought within one year of the old home's sale.

Senators who supported the plan Tuesday said they were moved by recent reports in high-value areas of Florida that showed the rapidly decreasing availability in homes valued between $250,000 and $500,000. The Sarasota Herald-Tribune reported Sunday that Sarasota had a 2.4-month supply of homes for resale in that range in January, compared to a six-month supply at the same time last year.

"I know this plan isn't perfect," said Sen. Mike Bennett, R-Bradenton, committee chairman. "But if we kill this bill here we may wait another year for solutions. ... Sometimes if you wave a big stick, people will come up with solutions."

But it's far from clear whether Haridopolous and Domino will succeed in getting the measure on the November 2006 ballot.

The joint resolution requires a three-fifths vote in each chamber, assuming it even manages to get through all committees - three more in the Senate and four in the House. Last year, it never got past a single committee because lawmakers were worried about lost revenue and tax disparity.

"When we wrote Save Our Homes, it was to keep people from being forced out of their own home because of high tax bills," said Sen. Steve Geller, D-Hallandale Beach, one of only two committee members Tuesday to oppose the ballot measure. "We didn't pass something that said "Save Our Ability to Move Anywhere We Want.' "

The measure is also likely to continue to face heavy opposition from local governments. As early as January, Pinellas County Property Tax Appraiser Jim Smith said he didn't support the plan and wrote Domino to say so: "This resolution would dilute the tax base, and force those without the cap to take on a larger tax burden."

Gov. Jeb Bush also appeared lukewarm to the idea. Bush said he had not reviewed the plan, "But if we're given the chance to cut taxes, we should be looking at cutting taxes that impact the state budget," not local governments.

Joni James can be reached at 850 224-7263 or jjames@sptimes.com

[Last modified March 16, 2005, 04:27:42]