In 1992, Florida voters were worried about runaway property values causing drastic increases in property taxes from one year to the next. With so many people wanting to move here, property values were climbing rapidly, and this was causing property taxes to skyrocket. Amendment 10 was proposed, which is a benefit of the homestead exemption that provides homeowners protection by limiting the maximum that the assessed value of their home for tax purposes can be raised to 3%, or the CPI, whichever is lower. The Amendment to the state constitution passed, and it became the law of the land in 1995.
How does it work? Like anything that relates to taxes and the government, there is a lot of confusing math involved. Let’s say that you live in a taxing district that taxes your property at a rate of 10 mils, and you bought a starter house at #1 First Ave. for $75,000 in 1993. At the time, the state of Florida had a $25,0000 homestead exemption. You would then owe 10 mils on the $50,000 taxable value of the home, or $500 in property tax each year. Your house was valued at $80,000 in 1994, and you paid $550 in taxes for 1994.
A housing boom hits, prices go way up, and by 1995 your home is now valued at $100,000. Your tax bill would have been $750 (a 50% increase from just 2 years before), but save our homes had gone into effect, so the increase in your home’s assessed value only went from $80,000 to $82,400. That means your property tax was only increased to $574.
Eight more years go by, and you decide in 2003 that you want to sell. Your home is now worth $145,000. Of course, save our homes only has you paying taxes on the assessed value of $104,000, minus your homestead exemption, making your tax bill $790 for the year. Anyhow, you get $150,000 for the place. The tax assessor still says it’s worth $145k, and the guy who buys it will have to pay $1200 in taxes in 2004, assuming the value stays at $145k. (you already paid 2003’s taxes)
You, however, bought your second house at #2 Second Street. You were able to get this one for $240,000. Your portable SOH credit was (145,000-104,000=41,000) so even though the tax guy says this place has a market value of $220,000, you will only have to pay taxes on (220,000-41,000-25,000), making your tax bill $1,540.
Then in 2008, voters approved an amendment that increased the homestead exemption to $50,000 for the non-school portion of property taxes. This complicated things even more, but that is a different topic.
Why do these Amendments keep getting voted on? Whenever the Democrats want more voter turnout, they make sure that something of interest to Democrat voters that will drive voter turnout is on the ballot. Tax cuts in property taxes, legalizing marijuana, increasing the minimum wage, saving baby pigs from the slaughterhouse, things like that.
5 Comments
William Copeland · August 29, 2023 at 8:30 am
Thank you for the Florida real estate tax discussion. I’ve been a property owner here since 2012, and I thought I understood everything I needed to know. Nope. Great Blog – top of my daily read list. Bill C-Sarasota
Jonathan · August 29, 2023 at 9:45 am
How many different items does your property tax for to?
Here we have 8, including small amounts (under $30) for the local hospital and county airport.
Divemedic · August 29, 2023 at 9:57 am
There are two parts to the property tax bill. Part one is based on the value of the property, which is what Save Our Homes applies to. That part goes to the county, SFWMD, and to the school board. That amount is about $1800 a year for us.
The second part is a flat amount charged to each residence, and pays for the fire department. That part of the bill is about $200.
Other than sales taxes of about 6%, that’s all we pay. No income tax or any of that.
Jonathan · August 29, 2023 at 4:32 pm
Interesting – and much simpler than I’m used to.
We have sales tax and no income tax here too. But they get you in other ways – for example, vehicle registration is double to triple what I used to pay: Here it is based on MSRP, not vehicle type.
I pulled my bill and was wrong – we have way more than 8 line items for the property tax:
General
Road and Bridge
Indigent
St med indigent
Ag extension
State indgnt
Cap Acquistn
Hospital
Aging Service
School
Airport
State
Culture and Rec
Landfill
General is the biggest piece, twice as high as school, Those 2 and hospital are just over $1,000 of my $1300 bill (up about $40 over last year)
I keep getting surprised at how much people elsewhere pay in property taxes, but I shouldn’t be – our former house in Ohio has gone from $1200 to $4400 in the last 5 years.
Steve · August 29, 2023 at 4:07 pm
Portability is a good idea, at least from the point of view of the populace. We don’t have it here, and as a result, there are scads of empty nesters who are still in 5 and 6 bedroom homes because to move into a 2 BR would increase their tax bill. Those homes would be of more use to someone with several kids, but why move to a smaller place if its going to increase your cost of living? Might as well keep the place so your grandkids have a backyard to play in when they come over.
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