FLORIDA PROPERTY TAX REFORM NEWS
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January 2008 - The Tax Reform was passed by the voters
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November 2007 - The final tax
reform proposal passed both chambers. Floridians will have a chance to vote for some
property tax relief in January. The highlights of the Constitutional Amendment are as
follows: Expands the homestead exemption. Allows "portability" of accumulated
Save Our Home benefits for homestead property owners. 10% assessment cap for all
non-homestead and commercial properties. Tangible Personal Property exemption of $25,000
for small businesses.
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The Florida Legislature adjourned on June 14, bringing the 2007 Special Session on
Property Tax Reform to a close. Both the House and Senate passed three bills making up the
property tax reform package.
The package includes: 1). a statutory rollback and cap of property tax rates, 2). a
proposed constitutional amendment creating a "super homestead exemption" and 3).
a bill designating the upcoming January 29, 2008 presidential preference primary as the
date for Floridians to vote on the "super homestead exemption" amendment.
Below is more specific details on what is included in the final package. Attached is an
updated chart that you should find useful. Legislators assured us that this is only the
beginning. They will continue to work on reforms that the Florida Association of Realtors
considers top priorities, such as amending the "highest and best use" language
in the Florida Statutes.
The agreement consists of a two-tiered approach to achieve immediate relief and long-term
reform. The combined elements of the plan offer $31.6 billion in tax relief over the next
five years - touted as by far the largest tax cut in the history of Florida.
1. The Statutory Component - Immediate Tax Relief
Cities and counties must lower their tax rates a certain percentage based on their past
taxing conduct. This component of the plan offers $15.6 billion of tax relief over five
years, with savings beginning this year. The statutory component affects all properties
(including homestead, non homestead, commercial) in a postive manner.
First, all cities and counties must adopt the rolled-back rate for the coming fiscal year.
In other words, tax levies for FY 2007-08 must be equal to tax levies for FY 2006-07,
excluding taxes levied from new construction. Then: After adopting the rolled-back rate,
the bill requires each city and county to further reduce taxes based on their recent
taxing history (from 2001 to 2006, the period in which property values rapidly increased).
To delve into this further, there will be five tiers. Between 2001 and 2006, if a County
had an average annual tax levy increase of a certain percentage then they'd have to roll
back a certain percentage more. So, if their tax increase was below 5% the cut is 0; over
5 to 7% tax increase the cut is additional 3%; over 7 to 9% tax increase the cut is 5%;
over 9% to 11% the cut is 7%; and over 11% tax increase the cut is an additional 9%. The
City cuts are similar. The bottom line is that those counties and cities that increased
taxes at a faster rate than the statewide average must offer larger tax cuts. Those that
modestly increased tax levies will in turn sustain smaller tax cuts.
Beginning in 2008-2009 and every year thereafter, the bill requires all local ad valorem
taxing authorities except school districts to set millage rates in accordance with the
rolled-back rate, adjusted by the annual growth of Florida personal income. A local
governing authority may override this cap requirement as set forth in Section 5 on page
13.
2. The Constitutional Component - Long-term Reform
The constitutional amendment cures the inequities in the property tax system by
transforming Save Our Homes through a new "super" homestead exemption. The new
exemption covers 75% of the first $200,000 of homestead value and 15% of the next
$300,000, with all homesteads receiving at least a $50,000 exemption. Current homestead
owners will be given a choice as to whether to keep their benefits and assessment cap
under Save Our Homes or to use the new super exemption. The bill also authorizes a $25,000
Tangible Personal Property exemption and allows targeted relief for affordable housing,
low-income seniors, and working waterfronts. This component offers $16 billion of tax
relief.
3. The Special Election
This bill authorizes a special election for #2 above - the Constitutional Component.
Voters will have the opportunity to adopt the proposed constitutional amendment during the
presidential preference primary on January 29, 2008. If voters approve the amendment, it
will lower property tax bills in 2008.
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