Governor Crist Proposes Property Tax Cut

Posted at 4:18 AM, Feb. 1, 2007

Governor Charlie Crist on Tuesday proposed a constitutional amendment that would cut property taxes as much as $4.7 billion a year.

For homeowners the savings would result from allowing counties to double the homestead exemption from $25,000 to $50,000. Homeowners would also be allowed to take their Save Our Homes property tax savings with them when they move anywhere inside of Florida. This would be a great boon to real estate sales.

For those who do not know about Save Our Homes, this is an amendment that passed several years ago and caps the value of a primary residence for property taxes to 3% per year or the Consumer Price Index (CPI), whichever is less. This is especially helpful when the property values were going up 20% or 30% per year. Those that live in one house for many years have an artificially low property tax bill. However when the property is sold the new owner pays property taxes based on the appraised value often paying thousands more than the previous owner. However, the original seller would purchase a new home and would have to pay taxes not at their old tax rate, but instead at the full-appraised value. This prevented many people from moving. For example, take a family that has a home that is 3,500 square feet. They live there many years. Their children finish high school, go to college and then move out of the home. Now instead of having four people in the home there are now only two. This couple may now be ready to downsize, however by moving they lose their Save Our Homes tax savings. They may want a home that is 2,000 square feet, but by moving, they may pay thousands more in property taxes than if they stay in their too large home. By making the tax savings portable, it will allow people to downsize or upsize their home, or just move to another area. This should help families and really boost the real estate market.

Also proposed is a provision allowing owners of rental properties, commercial properties, and non-homestead properties to have the same 3% cap on property taxes. These three groups never received the Save Our Home benefits. Providing the same benefits to these groups should help boost activity in these areas. By providing this to non-homestead properties, sales of homes to snowbirds that live in Florida for part of the year should increase.

Let us hope that this tax relief will be approved.