News for Broward Taxpayers
Winter-Spring 2008

The Proposed Tax Reform Amendment:
Something for Everyone

On January 29, 2008, Floridians will have an opportunity to cast ballots on a proposed constitutional amendment to cut property taxes. While the relief may be less than many hoped for, it contains four key types of tax savings. The proposed amendment requires the approval of at least 60% of the voters to become law. If approved, the tax relief will take effect starting in Tax Year 2008.

Portability of Savings.

Homesteaded owners will be able to move their Save Our Homes (SOH) benefit -- up to $500,000 -- from one homesteaded property to the next within Florida. To be eligible to move these SOH savings, the new Homestead must be purchased within two years of the abandonment of Homestead at the previously Homesteaded property. Owners of Homesteaded properties sold in 2007 will be eligible to move their SOH savings to a newly purchased property so long as it is Homesteaded by January 1, 2009. Portability applies to both upsizing and downsizing in value, based upon specified formulas (see p. 2). Portability may be used an unlimited amount of times and may be used for moves to anywhere within Florida.

Additional $25,000 Homestead.

The Homestead Exemption would double to $50,000 for all Broward homesteaded properties with an assessed value of at least $75,000. In a slight twist, the additional exemption applies to the third $25,000 in a property’s value (meaning the portion of your property worth above $50,000). The second $25,000 exemption does not apply to the school portion of your tax bill, meaning that the average Broward homesteaded owner will save an additional $308 -- starting this year -- if the amendment is approved. Properties with an assessed value of under $50,000 will not receive any benefit from this additional exemption.

Business Equipment Exemption.

Currently, all businesses in Florida are subject to an annual tax on tangible personal property (TPP). For a business, TPP items include equipment, computers, desks, phones, shelving, etc. In the case of small rental properties, TPP may include beds, refrigerators, etc. To give relief to small businesses, the amendment creates a $25,000 TPP exemption. This would result in a massive paperwork reduction for small businesses as they would no longer be required to file TPP returns after the first year, so long as the total value of TPP items remained under $25,000. This exemption will result in an average savings of $508 for each business -- and end the filing requirement for approximately 80% of all businesses.

10% Cap for All Other Property.

The annual growth of taxable value for non-Homesteaded properties -- such as businesses, apartments and other rental properties, and second homes -- is limited to 10% per year. The cap will protect against high spikes in taxes from year to year. The proposal would set 2008 as the base year for the cap, and owners could start seeing financial savings as soon as Tax Year 2009. While property values will not rise 10% every year, the cap still offers some relief and protection to properties in high-value markets like Broward from unpredictable tax increases. These properties would be subject to reassessment at full just (market) value upon a change in ownership or use of the property. The cap does not apply to the school portion of the property tax bill (approximately 36% of your annual property tax bill).

Want to see how your portability will work? We created a new calculator tool -- located on the top of each individual property record page -- so you can see exactly how these proposals could impact your tax bill.

Frequently Asked Questions:

How will portability upsizing work?

Upsizing occurs when you buy a new home with a higher Just (Market) Value than your current Homestead. To understand how portability works for upsizing, subtract your 2007 Save Our Homes value from your 2007 Just (Market) Value. The difference -- up to a maximum of $500,000 -- is your portability value. For the new home, calculate 85% of your estimated purchase price and deduct the portability value. (Important Note: the 85% figure is only a rough approximation, representing the Just Value after deducting for costs of sale, as the actual percentage may vary.) The remaining balance is the estimated Save Our Homes value for the new home. Of course, all of this is dependent upon the voters approving the amendment on January 29.

How will portability downsizing work?

Downsizing occurs when you buy a new home with a lower Just (Market) Value than your current Homestead. To understand how portability works for downsizing, calculate 85% of your anticipated new home purchase price, then divide that number by the 2007 Just Value of your current home. Multiply that amount by your 2007 Save Our Homes value and the final result will be your estimated new Save Our Homes value. (Note: As above, the 85% is an approximation and may vary.)

If the amendment passes, are additional future tax cuts dead?

No. Voters can approve the January 29 amendment and continue demanding additional tax reforms in November 2008 (and later). There is already talk the Florida Legislature will make large additional tax cuts during the March-May 2008 session. Likewise, some groups are circulating petitions to place additional property tax reform amendments on future statewide ballots. Others are still advocating for a first-time homebuyer exemption, more spending cuts, and other proposals.

I own two homes, so will portability let me move to the other house?

There is no clear answer yet to this question. The amendment appears to only allow using portability to move to a newly acquired property (i.e., after December 31, 2006). However -- as there is some confusion about the statutory wording of this -- we expect the Florida Department of Revenue will issue an advisory opinion resolving this issue if the amendment is approved by the voters.

Sale prices dropped in 2007. When will I see this in my assessment?

The January 1, 2008, assessment date -- used to determine the values for the November 2008 tax bills -- determines the value based upon the sale prices of similar properties in similar locations during the previous year. Florida law requires the valuation process be done in arrears. In years when values are rising, this protects owners by delaying increases. However, in years when values are dropping, this also delays the tax savings from those declines. The weakened South Florida real estate market of 2007 will be reflected on the 2008 TRIM Notices and tax bills.

Do I need to refile for Homestead if I move?

Yes. This is a common misunderstanding of homesteaded owners. A Homestead Exemption does NOT move with an owner from place to place. You MUST file for a new Homestead Exemption if you move. The Homestead you obtained at one location is only good for you at that location. To obtain a Homestead Exemption on any other property, you must apply for it. This is true regardless of whether or not the January 29 amendment passes. Portability will not eliminate this filing requirement.

Can I add my children to my title and still protect my Homestead Exemption and Save Our Homes value?

Yes, if you do this correctly. There are various ways you could add someone to the title while keeping your exemptions and Save Our Homes value intact. These include adding joint tenants with rights of survivorship, creating life estates with the remainder to your children, or placing the property into a trust. All of these changes are done through the preparation and recording of a new deed. We strongly urge you to speak with an attorney and visit www.bcpa.net/deeds.asp to learn more before making any deed changes.

Residential Property Survey

Please take a few minutes to help ensure our records about your property are accurate. Be sure to look up your property on our website, as we’ve recently added building sketches to those pages. Just click on the blue “See Sketch” link on the lower right-hand side of the property record page -- and please call 954.357.6831 if you see any errors in the sketch of your home.

Mailing Address Changes

If your mailing address is incorrect or if the name of an owner is misspelled, please promptly notify our Data Entry Section at 954.357.6841 or download a Change of Address form (PDF format) so we can keep our records up to date. Be sure to let us know if your mailing address changes in the future. This ensures you’ll always receive the important notices you need.