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SPECIAL REPORT: Your neighbor's tax bill

The tax man cometh to those who rebuild

In Indian Rocks Beach, one couple chooses to refine, another to redo, and that has made all the difference.

By SHEILA MULLANE ESTRADA
Published March 26, 2006

INDIAN ROCKS BEACH - Two admittedly well-off, retired families live next to each other in very different waterfront homes on Harbor Drive.

Their tax bills are very different as well.

Shera and Billy Bie have lived in a 1,702-square-foot, one-story block home for 10 years. Because of the property tax cap, it's assessed at about 40 percent of its actual value.

The Bies' roots in Indian Rocks Beach go back to the 1930s. They have no desire to leave. But they did want a bigger house. Instead of moving or adding on, they decided to renovate, to avoid a big tax bill.

In contrast, Debbie and Eddie Jordan just moved into a newly built 3,230-square-foot home next door that has two stories over parking and meets the latest flood regulations.

They bought the property as a second home in 1999. When they decided to retire, they tore down the original home and built a new one that meets federal codes. They moved in in December but now worry that they can't afford the property taxes.

The Jordans and the Bies are among many Indian Rocks Beach residents who are increasingly affected by property values and corresponding property tax bills.

Property tax rates on Harbor Drive range from 30 percent or less of actual value to 90 percent or more - it all depends on how long families have lived in their homes and what kind of improvements they make.

Residents who have owned and lived in their homes for years are protected against huge tax hikes by homestead exemptions and Save Our Homes. But those who put on new roofs, add rooms, or tear down and rebuild are finding tax bills exponentially higher.

"The way property taxes are levied actually inhibits people from improving their homes," says Indian Rocks Beach Mayor Bill Ockunzzi. "We need a cap on all property tax rates and somehow we have to provide incentives for people to improve their homes."

This financial reality kept the Bies from adding on.

"We have family members who come to visit and we wanted to add rooms for them, but because our taxes would go up, we decided to remodel instead," Shera Bie said.

The Bies, who are on a fixed income, planned to add a second story with two bedrooms and a bathroom. They hired an architect to draw up plans and got a construction estimate.

"Then we looked at what the addition would do to the value of our home and decided not to add on," Shera Bie said. "We added a closet instead."

Their tax bill has gone up very little in four years - $4,164 in 2001 and $4,670 last year. Because their remodeling was largely cosmetic and did not add square footage, they do not expect their next tax bill to change significantly.

That is not the case for several rental properties they own in town. Those are not homesteaded or protected by the property tax cap. One rental home purchased in 1983 had a $5,900 tax bill in 2001. Last year's: $11,750.

"The property tax cap has helped us a lot on our home, but we can't charge enough rent to keep up with the taxes on our rental properties," she said.

So they are planning to sell those properties. Whoever buys them will probably tear the older homes down and rebuild much larger, more expensive homes, a trend Mrs. Bie says is changing the nature of this community.

"People should not be forced to make - or not make - changes because of taxes," she said.

The Jordans paid $262,500 for their Harbor Drive property in 1999. Since then, their tax bill has risen from about $4,500 to $10,100. Because they did not live in the older home full time, they were not protected by the homestead exemption or the property tax cap.

"We wanted to keep the original home, but couldn't because of FEMA rules. It was built in 1968 and had the original wiring, plumbing, roof and flooring. Everything needed to be redone, but our insurance company wouldn't cover it for more than $180,000," Debbie Jordan said.

The couple worried that if a "big storm" hit, they would lose the house and would not get enough from insurance to rebuild. So they decided to tear it down and rebuild to Federal Emergency Management Agency codes. They spent more than $600,000 on the new house, put in a new seawall, a pool. The home is now worth more than $1-million, Debbie Jordan said. The tax bill could double or triple.

"We didn't give a thought to the tax consequences. We love it here, but we don't know if we are going to be able to afford to stay," she says. "It's just a shame."

[Last modified March 25, 2006, 04:17:15]