Portability worsens problem

The most popular part of the property tax amendment on the Jan. 29 ballot would enable homeowners to take at least a portion of their Save Our Homes tax benefit with them when they move. That's understandable. The natural first reaction by many longtime homeowners who would like to sell is to grab maybe a few thousand dollars in tax savings for a new home. Gov. Charlie Crist and the amendment's supporters stand in front yards throughout Florida with smiling homeowners.

But plenty of unhappy Floridians aren't in the picture: the renters and business owners who would not benefit from this change to Save Our Homes. The recent homebuyer who would receive no immediate relief. The angry next door neighbor who could pay higher property taxes forever on a comparable house. The amendment's key provision makes an unfair property tax more unfair, further shifts the tax burden onto taxpayers already paying more than their share and won't solve the housing crisis.

Save Our Homes limits annual increases in assessed value on homesteaded property to 3 percent or inflation, whichever is lower. As property values soared, property taxes on homesteads were kept artificially low by the cap. The longer homeowners stayed put, the larger the gap between the market value of their house and its assessed value. When homesteads are sold, the Save Our Homes savings disappears and the assessed value resets. So now there are gross disparities between owners of similar homes, depending on how long they have been there. The 10 percent of homeowners with the largest savings don't pay property taxes on more than 73 percent of their home's market value. The 10 percent with the least savings don't pay property taxes on about 12 percent of their home's value. That's not fair.

But this amendment is not the answer. It extends the unfairness by letting homeowners take up to $500,000 in protected Save Our Homes value with them when they move. That means the identical house next door may never be taxed at its market value or as much as your house, even after it is sold. And it means that longtime homeowners or those who live in more expensive homes where property values rise the fastest always will have a bigger property tax break than more recent homeowners or those who live in more modest homes in neighborhoods with stable prices. First-time homebuyers and anyone moving to Florida from out of state still will have to start building their Save Our Homes tax break from scratch.

When legislators included so-called Save Our Homes portability in the property tax amendment, they ignored warnings from their own lawyers and from Florida TaxWatch that extending this unequal taxation would make Save Our Homes more vulnerable to a constitutional challenge. They ignored concerns that it would result in a further shift of the tax burden to renters, business owners and owners of investment properties. And they ignored the reality that there are more significant factors contributing to the collapse of the real estate market, including inflated home prices and the mortgage crisis.

Florida has a serious property tax problem that needs to be addressed. But extending the unfairness of the current system and handing the most relief to those who already have the biggest tax breaks is not the answer. Allowing homeowners to take Save Our Homes benefits with them when they move sounds good, but it would only make a bad situation worse.

[Last modified January 11, 2008, 08:02:01]