Agents should be honest about taxes
© St. Petersburg Times, published April 27, 2001
It's sticker shock of a new sort for some home buyers.
The 1992 voter-approved Amendment 10 to the Florida Constitution is intended to limit property tax bill increases attributable to burgeoning home values. But buyers are discovering that the protection, known as Save Our Homes, is non-transferable. The exemption disappears when a house is sold.
The result is a glut of home buyers being hit with larger-than-expected property tax bills because of updated assessments.
The increase won't be known to most people until their Truth in Millage notices are mailed in August. But real estate agents, title companies and lenders making good-faith estimates for escrow accounts should ensure that adequate disclosure comes during the transactions.
It is a plea Property Appraiser Mike Wells makes routinely, and last week, he took his pitch to the West Pasco Board of Realtors.
"Please don't tell buyers their taxes are going to be the same as the seller," said Wells, a former real estate agent. "We have an obligation to explain it to people the way it ought to be."
Wells provided the example of a three-bedroom home with a pool on a central Pasco cul-de-sac that carried an assessed value of $122,616. Amendment 10, which, since 1995, limits annual property value increases to 3 percent of the Consumer Price Index, reduced the assessment to $106,130. After the homestead exemption, the owner paid $1,565 in county and school taxes.
However, the buyer closed in May 2000 and lost the Save Our Homes exemption of nearly $16,500, translating to a tax bill in 2001 that will be 20 percent higher than the seller's, even if the tax rates remain stable.
Along the Pithlachascotee River and in other desirable waterfront locations, the difference is even greater. The market value of homes there is increasing at about 10 percent annually, but the Amendment 10 provision keeps the assessed value growth at 3 percent or less.
It was a common criticism voiced during the 1992 campaign. Critics derided it as the Save Our Waterfront Homes amendment, correctly noting that the biggest tax savings will be enjoyed by owners of the most opulent homes in the most desirable locations.
That is one of the reasons the Times opposed passage of the amendment nine years ago. It has further cluttered Florida's archaic tax system, leaving neighbors with similar homes paying disparate property tax bills depending exclusively on when the home was purchased.
Pasco's 100,000 homesteads are now receiving $450-million worth of exemptions from the Save Our Homes initiative. Wells estimated that the reduced assessments will top a half-billion dollars when the 2001 tax rolls are certified in June, equating to approximately $9.5-million in lost revenue to the county and school district for the coming year.
The amendment, though, is now a fact of life. The least professionals in the real estate industry can do is be up front with unsuspecting home buyers about its long-term cost.
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