Expanding Florida’s Homestead Exemption
Florida voters will have an important decision to make for the 2018 election—whether to raise the Florida homestead exemption. At first glance, the legislation offers a substantial property tax break for homeowners; however, if approved, the homestead exemption bill may cost counties and cities enormous revenue.
The Florida legislature created the homestead exemption in 1934 to aid residents affected by the Depression. The homestead exemption—then $5,000.00—allowed residents to keep their homes despite inability to pay property taxes. http://www.tampabay.com/news/politics/legislature/florida-homestead-exemption-increase-closer-to-ballot/2322311. In 1980, under Democratic Governor Bob Graham, Florida voters raised the exemption to $25,000.00, and again in 2008 to $50,000.00 under Republican Governor Charlie Crist. http://www.tampabay.com/news/politics/legislature/florida-homestead-exemption-increase-closer-to-ballot/2322311. Now, the November 2018 ballot will give Florida voters the choice to raise the exemption even higher.
The proposed homestead exemption, House Bill HJR 7105 (https://www.flsenate.gov/Session/Bill/2017/07105) will reduce the value of Florida residences for property tax assessment purposes. The legislation seeks to increase the state’s current homestead exemption from $50,000.00 to $75,000.00 for homes worth $100,000.00 or more and would become effective on January 1, 2019. http://karplaw.blogspot.com/2017/05/florida-homestead-exemption-on-2018.html. This means that the exemption raise would tax a $100,000.00 home as if it were worth $25,000.00, and a $200,000.00 home as if it were worth $125,000.00. Estimates predict savings of $170.00 annually for homeowners under the new exemption. http://karplaw.blogspot.com/2017/05/florida-homestead-exemption-on-2018.html. Supporters of the raised homestead exemption argue that voters should have the chance to approve the property tax break, especially senior citizens and others whose home values suffered from the 2008-2009 recession. “It’s about putting money back in taxpayers’ pockets,” said Representative Jim Boyd, R-Bradenton. http://www.miamiherald.com/news/business/real-estate-news/article143080729.html. Senator Wilton Simpson, R-Trilby declared, “Let’s give our voters an opportunity to do what they know is right.” http://www.tampabay.com/news/politics/legislature/florida-homestead-exemption-increase-closer-to-ballot/2322311.
On the other hand, cutting property taxes for homeowners may cost cities and counties considerable annual revenue. Broward County Mayor Barbara Sharief warned that her county would face losses of $40 million a year, or the equivalent of what it costs to maintain the county parks department per year. “Making up that revenue would cause us to cut services and shift the burden to other taxpayers,” Mayor Sharief stated. http://www.miamiherald.com/news/business/real-estate-news/article143080729.html. The Florida Association of Counties estimated that Miami-Dade County would lose $76 million a year under the new homestead exemption raise. http://www.miamiherald.com/news/business/real-estate-news/article143080729.html. Such a loss in property tax revenue may force counties and cities to raise taxes instead for non-homestead properties, such as businesses and renters. The increase would not apply to school taxes, however. With less annual tax revenue, counties and cities may not be able to fund important local services like police and fire departments. http://floridapolitics.com/archives/237164-homestead-exemption-gaming-bill. As Mayor Sharief said, “This is not a tax cut. This is a tax shift.” http://www.miamiherald.com/news/business/real-estate-news/article143080729.html.
Sixty percent of Florida voters must approve the higher homestead exemption in the November 2018 election for it to become effective. If that happens, Florida will see an estimated negative fiscal impact of $752.7 million in the first year, growing to $816.8 million by the fifth year. http://www.floridaleagueofcities.com/docs/default-source/Advocacy/Issue-Briefs-Talking-Points/2017-ib—homestead-exemption.pdf?sfvrsn=0. Since it is a proposed amendment to Florida’s Constitution, it cannot be vetoed by Governor Rick Scott. This proposal will likely be a hot topic in the 2018 campaign, as candidates for state office will be forced to take sides on the issue—whether for homeowners or for cities and counties. Nevertheless, Florida voters will ultimately determine who receives the benefits and the burdens of the proposed tax break. As Representative Dane Eagle, R-Cape Coral said, Florida will see annual growing to $816.8 million by the fifth year. Florida voters must approve “the equivalent of what it costs”, so, “Let’s let the voters decide.” http://www.miamiherald.com/news/business/real-estate-news/article143080729.html.
Call Bart Chepenik, JD, LL M, Chepenik Trushin LLP at direct 305-613-3548, office 305-981-8889 for legal help and advising. We are happy to speak with you.