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SPECIAL REPORT: Your neighbor's tax bill

Tax burden shifts to recent home buyers

Legislation aimed at protecting established homeowners is causing problems for new residents and those looking to move.

By CATHERINE E. SHOICHET
Published March 26, 2006

When voters approved Florida's Save Our Homes law in 1992, Citrus officials predicted it would have a dramatic impact on local taxpayers.

They were right. A St. Petersburg Times analysis provides hard numbers showing the impact of the tax cap law.

Under the law, taxable values of homesteaded properties can rise only as fast as inflation, or 3 percent, whichever is lower. The law was designed to keep residents from being taxed out of their homes, but it also affects local governments.

More than $1-billion in property value was shielded from taxation because of Save Our Homes last year, according to property appraiser Melanie Hensley. In 2004, that number was just more than $500,000, she said.

The Times analysis of the property taxes of every homesteaded property in Citrus - 46,078 properties - also found:

Residents of high-growth areas like Black Diamond, Citrus Hills and Sugarmill Woods pay taxes on a far higher percentage of their home value than residents in older areas of the county, such as Beverly Hills and Homosassa Springs.

The widest disparities, neighbor to neighbor, are found in the county's waterfront communities, like Crystal River and Homosassa, where property values have skyrocketed and turnover in real estate is more common. While a longtime resident may be paying hundreds of tax dollars annually, a neighbor who purchased or built a similar home more recently likely pays thousands because the cap is lifted when property is sold.

Rising values and capped taxes now mean that the average Citrus homeowner has less than 42 percent of their home's market value being taxed.

Former property appraiser Ron Schultz, who actively campaigned against Save Our Homes when it was first proposed, said his views of the law have changed. Like most things, he said, it is neither as bad as its opponents feared it would be nor as good as its supporters predicted.

"There is no doubt that what you had was a transfer of the tax burden off of Florida's long-term residents," he said. "People who were in a house and stable and did not choose to sell or buy saw a very real tax protection in this."

But still, Schultz describes some aspects of the system as "dysfunctional."

The catch is that residents who decide to sell can't take the cap with them when they buy a new home. That creates tax bill disparities within neighborhoods.

"It's a double-edged sword," Commissioner Dennis Damato said. "It's bad for the person moving, but it's actually kind of good for local government because it enables them to pick up some of the fees that they didn't get initially."

Some people who were initially grateful for the law's protection now say they are finding themselves trapped in their homes.

Damato said he and other county commissioners have received complaint calls from residents who say they want to move, but can't because they would not be able to afford the taxes on a newly purchased home.

"Everything has skyrocketed. It became a real issue," said Marvia Korol, a Realtor with RE/MAX Realty One in Lecanto. "People are now shopping with taxes in mind."

It's a problem Commissioner Vicki Phillips says she can relate to.

"I'm one of those people that's in that same situation," she said.

Phillips said she and her husband discussed moving into a smaller home, but decided to stay in their three-bedroom Lecanto home to preserve their tax cap.

But soon residents may no longer have to worry about staying put. This year, a legislator's proposal to allow homeowners to transfer their tax-cap savings to a new, more expensive house is gaining traction in Tallahassee.

Several Citrus officials said they support the idea of making the cap portable.

"It will be a good thing for a lot of people," Hensley said, adding that she thinks caps should only be portable within the county. "There are people in very large homes whose children have moved out. They're kind of stuck in that huge house because of the cap that they may have."

Damato said if legislators could design a fair system, it might be to everyone's benefit.

But Phillips said she is not sure portability is the right solution.

"You have to look at the other side. You have to look at the revenue the county would lose," she said. "Property tax is the only revenue that counties generate."

--Catherine E. Shoichet can be reached at cshoichet@sptimes.com or 860-7309.

[Last modified March 26, 2006, 00:25:14]