Florida Tax Reform is a Good Start

By Guest Author Calum MacKenzie, New Tampa, Florida

The recent bills passed by the Florida legislature represent a good start toward repairing our very broken system, but they stop short of being a full solution. The current broken tax situation is the culminations of years of explosive growth in real estate values coupled with a well-intentioned attempt to limit the damage done to long-time Florida homeowners. The tax cut and tax cap bills passed by the House and the constitutional amendment each address parts of the situation that have made Florida notorious for its high property tax values, but they do nothing to address the inequities of a system that offers special tax breaks to some homeowners by displacing their fair share of the burden onto the shoulders of others.

In 1995, the legislature recognized the effect of rapidly rising real estate values on current homeowners by instituting Amendment 10, known as Save Our Homes. In essence, homeowners were feeling the down side of the real estate boom. Rising home values meant higher taxes, in many cases, so much higher that some were in danger of losing their place of residence. Save Our Homes mitigated the tax rise by putting a cap on how fast the assessed property value could rise. The fact that the amendment only applied to homes that are classified as primary residences is consistent with the intent of the bill – to prevent those who had limited income (not necessarily LOW income, but limited in the sense that it was dependent on the income of a single homeowner) from being taxed out of their homes.

Unfortunately, it was a nearsighted solution. Over the course of ten years, Save Our Homes has been the main contributor to the inequity in a system that can tax one homeowner $4000 while his next door neighbor in an identical home pays $2,300. In addition, it offered no benefits whatsoever to those who own rental property, businesses or second homes.

The effect of the proposed amendment will be to phase out Save Our Homes and replace it with a far more equitable property tax exemption that will apply evenly to all primary residences. While this doesn’t address the inequities completely, it is an important first step in fixing a system that has become irretrievably broken. The danger is that in all the congratulatory hand-shaking, our elected officials will lose sight of the fact that they have only cleared the first hurdle. It’s important that we all keep the pressure on and hold our politicos accountable to fulfilling the promises that got them elected.

Read more at Florida's Super Exemption.

Calum MacKenzie is Broker/Owner of Real Living Southern Homes and can be reached at (813) 948-5900.