Real estate industry has to be honest about taxes
© St. Petersburg Times, published April 29, 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 caused by 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 Alvin Mazourek makes routinely. He urges real estate agents to not tell buyers their taxes are going to be the same as the seller.
This example illustrates the changes:
A three-bedroom home with a pool in Hernando County carries a just value of $122,616. Amendment 10, which, since 1995, has limited annual property value increases to 3 percent or the Consumer Price Index, whichever is less. That reduces the assessment in this example to $106,130. After the $25,000 homestead exemption, the owner paid about $1,850 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 coast and in other desirable waterfront locations, the difference is even greater. The market value of homes there is increasing at a rate of more than 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.
Hernando's approximately 42,000 homesteads are now receiving about $42-million in exemptions from the Save Our Homes initiative, equating to approximately $850,000 in unrealized revenue to the county and school district for the year 2000.
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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