AMENDMENT 10 - "SAVE OUR HOMES"  

NEWS UPDATE!

SAVE OUR HOMES PORTABILITY

The Florida Department of State has approved the format for a petition to help Florida homeowners with homestead exemptions keep lower tax bills even if they move.

The approval clears the way for supporters to begin collecting signatures needed to place "Save Our Homes Portability" on the November 2008 ballot.

Click here to download the form. 

"The Florida Legislature could add the issue of Portability to its January special session agenda and adopt our ballot language," said Palm Beach County Property Appraiser Gary Nikolits, a member of the Board that sponsors the petition drive. "That would save us the work of gathering the nearly 750,000 signatures needed to place the issue on the ballot," he added.

The portability language was written by property appraisers who must administer the program if it is adopted. "It simply makes sense that if property appraisers have the responsibility of implementing portability, they would be the best ones to write the proposal. Property appraisers understand how it should work to make it fair to taxpayers and taxing authorities alike." Nikolits said.

Under the proposal, a homeowner with a Homestead Exemption could transfer a cap valued up to $400,000 to a more expensive property. If a homeowner is moving down in the market, that transfer could not exceed 50% of the market value of the new property. Portability would be permitted throughout the state.

According to Nikolits, the $400,000 limit on what you can transfer to another property covers about 96% of the properties in Palm Beach County. "The committee was careful to make certain you would not devastate the budgets of smaller counties where property values are generally lower than they are here; that is why we wrote the limit when moving to a less expensive property," Nikolits said.

Opponents of the Portability measure, typically city and county government officials, contend that it would reduce revenues to government coffers and make it difficult to pay for growth. Nikolits disagrees but does agree that making Portability statewide has been a concern to smaller counties. "Residents of smaller counties are Floridians too, and when they move they deserve the same benefits as everyone else," he said.

"The way we have written the measure, we don't believe there will be any detrimental affect on local governments; in fact it will provide an economic stimulant to what is becoming a stagnant real estate market," Nikolits said. Portability will add two sales that the real estate market would not have had, and stimulate construction for the building industry and sales for the home improvement and furnishing industries. "Portability will provide more money from documentary stamps, sales taxes, real estate commissions, building permit fees and other items," he said. Turning property over also will add taxable value to the tax rolls, Nikolits said. "With portability everyone wins."

A bank account has been opened at Southwest Capital Bank to accept donations for the distribution of petitions and certification of signatures. Donations in any amount should be made payable to Save Our Homes Portability and mailed to Philip C. Bennett, Treasurer, P.O. Box 490, Fort Myers, FL 33902.

PORTABILITY FACTS

What is Save Our Homes Portability?

Save Our Homes Portability is a proposal to change the State Constitution to allow a property owner to transfer the difference between the market value and the assessed value of homestead property to another homestead property when they move.

Why is Save Our Homes Portability necessary?

Many property owners feel "trapped" in their homes knowing that if they move they may be faced with substantially higher property taxes. Save Our Homes Portability would permit a homeowner to transfer a portion of their current tax savings to a new property wherever they move in Florida.

How would portability work?

If you move from your current homestead property to a new homestead property and the market value of the new property is higher than the market value of your old property, you can transfer your actual cap differential up to a maximum of $400,000 from your former homestead property to the new homestead property. If the property you are moving to has a lower market value, the amount of the cap differential you can transfer cannot exceed 50% of the market value of the new homestead property.

If two or more persons own separate homestead property and decide to move a single new property (such as in the case of a marriage), the amount of the cap differential they may transfer will be the larger of the cap differentials, subject to the limits noted above.

How long do I have between the sale of my house to establish a homestead on another property?

You will have 24 months from the date of which you either sold or moved out of your existing homestead property to establish a new homestead. During this interim period you cannot establish a residency-based benefit in any other state.

What is the cap differential?

First, look up your property on PAPA. Then simply subtract the Assessed Value from the Total Market Value. That amount is the cap differential and it is that amount which you can transfer to a new property, subject to the limitations noted above.

Example:
Total Market Value $288,600
Minus Assessed Value $153,861
Cap Differential $134,739* This is the amount that you can take with you if moving to a more expensive property. If moving to a less expensive property, the amount you can take with you would be your cap differential up to 50% of the total market value of the new property.

Will Save Our Homes Portability save me property taxes?

Yes. That's the whole idea behind portability; to allow you to move and take your current tax savings with you.

What Is "Save Our Homes"?

The Save our Homes amendment (Article VII, s. 4 of the Florida Constitution-Amendment 10), of the State's Constitution was approved by Florida voters in 1992 and put into effect in 1995. This amendment places a limitation of 3% on any annual property tax assessment increases on Homestead Properties in Florida.

The “Save Our Homes” Assessment Limitation requires that all property be assessed at its just value for ad valorem tax purposes. Just value has been interpreted to mean fair market value.15 However, section 4 also provides exceptions to this requirement, in the form of valuation differentials and assessment limitations. The most significant of which is the “Save Our Homes” assessment limitation. The annual increase in homestead property values is limited to 3 percent or the Consumer Price Index percentage,
whichever is lower, not to exceed just value. If there is a change in ownership, the property is to
be assessed at its just value on the following January 1. Section 193.155, F.S., implements this
assessment limitation.

The “Save Our Homes” assessment limitation has benefited Florida homestead property owners
in the form of reduced ad valorem taxes. However, the assessment limitation has had an
unforeseen consequence. Rapidly escalating property values in many Florida communities have
resulted in an environment where homeowners may be reluctant to sell their property and
purchase new homes due to the often substantial increase in property taxes. Several bills were
filed during the 2005 Regular Session to address this concern. In general, these legislative
proposals attached the tax benefits to the owners, rather than the property, and allowed the
homeowners to retain their reduction in tax assessments when they move to a new home in the
state.

Save Our Homes (SOH) was spearheaded by Mr. Wilkinson, and approved by Florida voters. For all property first granted homestead exemption in the prior year, that year’s assessed value will be the base value for the implementation of "Save Our Homes". Thereafter, the assessed taxable value will not increase more than 3% or the percentage change in the Consumer Price Index, whichever is less. The property’s market value may differ from SOH assessed taxable value. SOH assessed value will never be greater than market value.

The Property Appraiser's staff continually monitors new construction and has recently completed a reassessment of every parcel of residential property in each county. County property appraisers throughout each county work yearly to re-measure homes and amenities in preparation for continual implementation of Amendment 10.

Property granted homestead shall be assessed at full market value (just value) as of January 1 of the year in which the property receives the exemption. In subsequent years, the assessed value of homestead exempt property will not increase more than 3% or the percentage change in the Consumer Price Index, whichever is less. There are exceptions to that limitation, including new construction or additions which are found to have escaped taxation in the past. Also, the limitation does not apply the year following a change of ownership.

What properties are affected?

Homestead tax exempt properties only. Only homestead property that remains under the same ownership during the calendar year qualifies for the limitation. Non-homestead property (such as residences without homestead, vacant land, non-residential property), agricultural property, tangible personal property as well as homestead property that has been sold or otherwise conveyed to a new owner during the calendar year are not subject to the limitation on assessment.

How does a divorce or death of a spouse affect your SOH cap?

The cap remains in effect upon the change of title due to divorce or death of a spouse as long as the remaining owner originally made application and continues to live on the property as their permanent residence.

Does a house with partial homestead qualify?

Yes, but only the portion applicable under the homestead guidelines.

Does SOH apply to homestead parcels with multi-buildings?

Yes, but only the portion applicable under the homestead guidelines.

Does SOH apply to homestead parcels with agricultural classification?

Yes. The residence and curtilage applicable to the homestead portion qualify.

What is curtilage?

The land and structures, on an agricultural classified property, immediately surrounding the homesteaded residence.

What happens when I sell my property and buy a new home?

When a homestead property sells, the SOH assessed value returns to market value in the year following the sale. That market value assessment then becomes the base value for SOH purposes for the new owner/homestead applicant. Your property taxes will more than double or triple due to loss of homestead tax exemption for the first year, and remain higher. This is why we support HJR33. The way things work right now, people who stay in their current homes will be protected from skyrocketing property taxes (due to the increase in property value), but the minute they move they are hit with a giant tax increase.

The Senate analysts stated that the average statewide differential between the current (taxable) value of a tax homesteaded home and the actual assessed value (upon sale) is $39,000.  In seven years that number is expected to be $359,000.  How many people will sell their homes and move if their property taxes will increase four fold?

What happens to the value of my homestead property when I make additions or improvements?

The additions or improvements are valued at market value in the year of construction, and that value is then added to your capped assessment. SOH then applies to these additions/improvements in subsequent years. The full just value of physical alterations to the property such as additions or improvements (not including normal maintenance) will be added to the property's assessment after the cap has been applied to the qualifying homestead property.

How is property with a partial homestead exemption affected?

Only that portion of the property receiving homestead exemption is subject to the assessment limitation. The remainder of the property is assessed at full just value under the law.

What happens if errors are made in arriving at any annual assessment due to a material mistake of fact concerning an essential characteristic of the property?

The assessment must be recalculated for every such year and corrected only for the current assessment.  Florida Supreme Court case of Smith v. Welton, 729 So. 2d 371 ( Fla. 1999). You may appeal to the Value Adjustment Board (VAB). Click here for more information on this process.

Example of SOH scenario involving the assessment of a duplex with a Homestead :

Base Year: Correct Assessment 

1) 1998 market value:             $50,000 (1st yr homestead assess) 
                                                 -$25,000 homestead exemption 
                                                =$25,000 taxable value (correct)

2^nd Year: SOH Incorrect as Exemption Was Applied To Entire Duplex Value

2) 1999 market value increases:  $80,000 (1st year of SOH cap)
                                                         $51,500 SOH Value (1998 Assess. +3%
                                                        -$25,000 homestead exemption
                                                       =$26,500 taxable value (incorrect)

2^nd Year: If SOH Was Correct Exemption Applied Only to 1/2 Duplex Value

3) 1999 duplex market value:  $80,000(1st year of SOH cap)
                                                    $65,750 SOH Value (1998 assess. +3%)
                                                   -$25,000 Homestead Exemption
                                                  =$40,750 taxable value (correct)

In #3 the correct 1999 SOH value of $65,750 is calculated as follows:

1998 value of 1/2 duplex = $50,000/2 = $25,000
1998 SOH capped 1/2 duplex value $25,000 + 3%  = $25,750 (1999 SOH capped value)
1999 value of uncapped 1/2 duplex = $80,000/2  +$40,000
                                                                                    =$65,750 assessed

Can my Taxes go up more than SOH capped percentage?

Yes, SOH is a limitation on the assessed value of the homestead property, not the taxes. Millage rates (determined by the various taxing authorities) may increase or decrease as those taxing authorities determine their budgets. In addition, on multi-dwelling/agricultural parcels only the homesteaded portion is subject to the SOH limitation.

What is the "recapture" rule?

Governor Chiles and Cabinet approved a Department of Revenue rule in 1995 directing property appraisers to raise the assessed value of a qualifying homestead property by the maximum of 3% or the percentage change in the Consumer Price Index (CPI), whichever is less, on all properties assessed at less than full market value whether or not that property’s value increased during the calendar year.

For example, Property A’s market value increases by 10 % this year. As a homestead property, the property appraiser can only increase the value by 3% or CPI, which ever is less under SOH.

In the next year, Property A’s market value did not change. Since its assessed value under SOH remains under market value, the property appraiser must increase the assessed value by 3% or CPI, which ever is less, to bring its value closer to full market value.

In Tax Year 2000, SOH exempted those parcels entitled to Homestead Exemption a total of $27.5 billion in assessed value in Florida statewide.  

IMPORTANT REMINDERS: Even if the property received a homestead exemption under the previous owner, the limitation -- just like the exemption -- expires with a change in ownership. The new owner(s) must apply for and receive a homestead exemption.

Property taxes for new owners will be calculated on the basis of full just value of the property less any exemption(s) in that first year.