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House group backs homestead portability bill

Author johnbsims3
Admin Male

#1 | Posted: 23 Apr 2007 19:16 
House group backs homestead portability bill

Saturday, April 21, 2007

TALLAHASSEE Property owners could move some Save Our Homes benefits from one homestead to another under a bill that received broad support Friday from a powerful House council.
"This eliminates the disincentive to move," said Rep. Carl Domino, R-Jupiter.

Domino has tried to make Save Our Homes benefits portable for the past four years and finally got his day Friday, when the measure received broad support from the House Policy and Budget Council.

The only opposition on the 33-member council was from Rep. Curtis Richardson, D-Tallahassee, who questioned the effect the bill could have on the state's smaller, rural counties.

The positive vote was a significant departure from the sharp focus of House Republican leaders so far this session. They've concentrated instead on House Speaker Marco Rubio's plan to eliminate property taxes on primary homes, known as homesteads, and replace that lost revenue with an increase in the state sales tax.

Eliminating taxes on homesteads, they say, would also eliminate any hesitation to move to a new home caused by Save Our Homes, a voter-approved constitutional amendment that caps annual increases in the value of homesteads to the rate of inflation or 3 percent, whichever is less. The savings that a homeowner accumulates from the amendment is not currently transferable when someone sells one homestead and buys another.

A debate on portability in the House was unlikely until this week, when Domino agreed to vote for Rubio's tax swap on the House floor in return for a debate on one of Domino's top priorities.
"I got what I wanted," Domino said after the vote Wednesday on Rubio's plan.

When asked about the recent interest in portability in the House, Rubio pointed to the Senate tax reform package, which does not include his tax swap but would make Save Our Homes portable.

"We want to make sure one of our committees at least has a hearing on it and the House has some level of procedural work on it," said Rubio, R-West Miami.

Portability of Save Our Homes has become an issue in recent years as the market values of homes have raced far beyond taxable-value assessments based on the 3 percent cap. The gap between assessed value and market value has created thousands of dollars in tax savings for homestead property owners.

But many homeowners say that gap also has prevented them from moving to a new dwelling, because they can't transfer it to a new homestead.
The House portability bill (PCB 07-09) would let homestead owners move the accrued savings. The amount that can be transferred, however, is limited to the amount that would reduce the assessed value of the new property to no less than the assessed value of the old property.
For example, if the owner of a $500,000 home is paying taxes based on a $300,000 assessment, the entire $200,000 in assessment savings could be transferred only to a new home worth $500,000 or more.

If that same homeowner moved to a dwelling that was worth $400,000, his portable savings would be $100,000, or the difference between the market value of the new home and the assessment of the old one.

There would be no portable savings if that same homeowner moved to a house worth $250,000, because the new house would be worth less than the old assessment.
The Senate portability plan is more limited. First, it would cap the amount of savings one could transfer at $500,000.
Secondly, it would allow the assessment value of the new home (the sales price minus the savings transfer) to increase by as much as 10 percent a year until that value equals what the home without the savings transfer would have been worth under the Save Our Homes assessment cap of 3 percent or less. At that point, the regular Save Our Homes assessment cap would kick back in.

Using that Senate formula, a homeowner with $200,000 in Save Our Homes savings who buys a new home valued at $500,000 would get eight years of tax savings.

Richardson questioned the House plan Friday, saying it could drain rural government coffers if South Florida homeowners port their savings to North Florida.

But Domino dismissed the idea, saying the cap would invigorate the real estate market and encourage developers to build more homes in North Florida.

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House group backs homestead portability bill
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