Q & A: Here's how changes in Florida's property tax law affect you
Have questions about what the Legislature's vote to reduce property taxes means? Join the club.
In recent days, you've been blitzing us with calls and e-mails to ask: How much will be cut from my tax bill this year? How should I vote on the so-called super homestead exemption Jan. 29? Do I have to give up Save Our Homes?
The jury is still out on the fate of the proposed constitutional change in the homestead exemption. But the answers to many of your other questions about what state legislators have done are clear.
Q. What happens now that Gov. Charlie Crist has signed the legislation to start the first phase of property tax breaks?
A. Most cities, counties and special taxing districts will be required to freeze tax collections at current levels, then make an additional cut, ranging from 3 percent to 9 percent. School districts are exempt.
Q. When will I find out how much I will save?
A. County property appraisers send a truth in millage, or TRIM, notice to all property owners in August. This notice is not a bill. Tax bills typically don't arrive until November. But the notice will tell you the taxable value of your property and the estimated taxes from each local taxing authority, for example the County Commission, cities and the School Board. The notice will also tell you when and where these authorities will hold public meetings to discuss their proposed budgets and set your final tax rates.
Q. How much will most people save?
A. On a statewide average, the initial property tax reduction should be $174 for homeowners, $199 for owners of non-homestead residential property and $944 for owners of commercial property. The exact amount depends on a property's value and location.
Q. Can local governments override the rollback and revenue cuts?
A. Yes. But it would take a two-thirds majority of the city or county commission, or in some cases a unanimous vote.
Q. What happens after this year's tax cut? Can taxes go up again?
A. Local governments will have to limit future growth in tax collections to the rate of personal income growth in Florida. But local governments will be able to increase their budgets in other ways. New properties can be added to the tax rolls, increasing local revenue. Cities and counties also may find other approaches to pay for local services, such as increasing fees on new home construction.
Q. What about the proposed constitutional amendment to create a "super-sized" homestead exemption?
A. On Jan. 29, voters will be asked whether to create the new tax exemption, which would eliminate an estimated $16 billion in property taxes during its first five years. The exemption would become part of the state constitution and go into effect only if 60 percent of voters agree.
Q. How would the new exemption work?
A. Permanent Florida residents are currently eligible for a $25,000 homestead exemption (meaning that much of a house or condo's value cannot be taxed), as well as Save Our Homes protections that limit increases in a primary home's taxable value to 3 percent a year. If voters approve the new exemption, property owners will have to make a one-time choice between keeping the existing benefits or taking the super exemption.
Q. What if I opt for the larger exemption?
A. Then you'd give up your Save Our Homes tax cap and the $25,000 standard exemption. You would become eligible for a new exemption that shields 75 percent of a home's value from taxation, up to $200,000. If your home is worth more, the new exemption would also eliminate taxes on 15 percent of its value between $200,000 and $500,000. The minimum exemption would become $50,000.
Q. What if my home is worth more than $500,000?
A. You would receive no additional tax benefit.
Q. If I'm a first-time home buyer, would I get a tax break?
A. Yes. Instead of the Save Our Homes cap and the $25,000 exemption, you would qualify for the super exemption.
Q. What is Save Our Homes, and how do I know if I have it?
A. It's a requirement in the state constitution that prevents the value of a permanent Florida resident's home from being increased more than 3 percent a year for tax purposes. Only year-round residents can benefit, and only on their primary residences.
Q. If the new exemption becomes law, what happens if I choose to keep my Save Our Homes cap and $25,000 exemption?
A. As long as you remain in your present home, nothing. But if you move or ownership of your home changes, you would lose the cap and automatically be put under the new exemption.
Q. I think I might save money under the new exemption. Is it really a better deal for me?
A. That depends. There are several factors. By giving up Save Our Homes, the value of your home may increase to the point where you would actually pay more in taxes, even with the super exemption. Some projections show that certain homeowners could be better off financially by keeping Save Our Homes, especially if they intend to stay in the same residence for at least seven years.
Q. Why would I vote for the new exemption?
A. You might think it will make the tax system fairer. With Save Our Homes, longtime residents may pay much less in property taxes than newcomers in identical homes. The new exemption would be the same for all.
Q. What if I kept Save Our Homes benefits, then moved?
A. You would automatically be switched to the new exemption and lose your Save Our Homes benefits
Q. I don't own a home, I rent. What would the super exemption mean for me?
A. You'd get no benefit, and neither would your landlord.
Q. I'm a snowbird and own a Florida home. Do these tax changes help me?
A. The first phase, which requires cities and counties to freeze their property tax rates and trim them, should lower your property taxes. However, you would not qualify for the super exemption.