Anna Maria Island Real Estate Sales Blog

Here's a good overall treatment of the Florida Save Our Homes Portability Amendment to the Constitution, as found in the Bradenton Herald on January 24, 2008. Personally, the portability feature would enable people to sell and buy homes they cannot do now, since the new purchase voids the Save Our Homes feature that limits their tax liability. I am encouraging people to vote YES to Amendment One, even though it's not perfect. It is, however, a start to limiting the incredible increases Florida homeowners have seen during the last several years.

John

Property tax 'portability' may cure one problem, cause another

By BILL KACZOR

Associated Press Writer

TALLAHASSEE, Fla. --

As Florida real estate prices rose in recent years, many people felt trapped in their homes because moving would mean getting hit with a property tax bill that could at least double or triple.

On Tuesday, Floridians will decide whether to approve a constitutional amendment that would let them take a current assessment cap with them to a new primary home, a concept called portability.

While proponents say that would help, critics say it would hurt owners of second and vacation homes, businesses and other properties who don't get that break.

Portability would let primary homeowners, or homesteaders, transfer all or part of their existing Save Our Homes break - a 3 percent annual cap on assessment increases. That applies to empty nesters looking to downsize their homes as well as growing families needing more room.

Richard Payne, though, is just looking for a change of scenery and an inland location where he could also save money on hurricane insurance. He now lives near Daytona Beach in Edgewater.

"I want to sell my home, and if I bought another house the same size I would pay outrageous tax," said Payne, 69, who cast an early vote for Amendment 1. He now pays $1,459 a year, but bills can be much more in South Florida and other areas with higher real estate prices.

While Save Our Homes has been a boon to longtime homeowners like Payne, taxes on other properties such as second homes, businesses and rentals have increased to make up the difference. Portability is expected to widen that gap by giving primary homeowners an even greater tax advantage.

Out-of-state homeowners have filed two lawsuits challenging Save Our Homes and Amendment 1's portability provision, claiming they are unconstitutional because they unfairly favor people who live in Florida. Both lawsuits are pending.

Others are afraid portability would dampen second-home sales and real estate investment by shifting even more of the tax burden to non-homesteaders.

"As I look 20 years out into the future and I see this portability that you're talking about, I see a disaster that's going to make Save Our Homes seem like a walk in the park," St. Petersburg real estate broker Nancy Riley said in August.

Riley, then president of the Florida Association of Realtors, was reacting to a similar portability proposal presented to the Taxation and Budget Reform Commission, on which she serves.

The association and Riley, though, now are backing Amendment 1 despite her early worries about portability.

"That's not the only part of the amendment," Riley said. "Because it has something for everybody, it softens the blow."

One provision would give homesteaders another tax break. It would double the existing $25,000 homestead exemption but only for homes valued at more than $50,000. Also, the additional exemption would not apply to school property taxes. It's expected to save the average homesteader $240 a year.

The portability provision, retroactive to 2007, would allow homesteaders to take up to $500,000 in Save Our Homes benefits to a new residence.

The amendment's other two provisions would help non-homestead property. One would impose a 10 percent limit on their annual assessment increases except for school taxes. It's expected to offer relatively little relief, though, because assessments seldom go up that much.

Finally, the proposal would give businesses a $25,000 exemption on equipment and other tangible personal property.

Not all portability critics have had a change of heart.

"Portability perpetuates and exacerbates the problems that we're seeing with this tax shift," said Dominic Calabro, president of Florida TaxWatch, a research group that has supported other tax relief proposals but opposes Amendment 1.

Calabro cited a legal analysis prepared for the state by University of Georgia law professor Walter Hellerstein. He concluded portability may violate the U.S. Constitution by giving in-state home buyers an advantage over newcomers.

Senate Finance and Taxation Chairman Mike Haridopolos, R-Indialantic, said other legal experts disagree. He likened portability to reduced tuition the state's universities offer to Florida residents.

"We think it's a benefit that people have earned," he said. "It's not something that's a giveaway. These people have invested in Florida for years and years in order to potentially transfer this tax savings from one home to another."

Gov. Charlie Crist, who is leading the campaign for Amendment 1, also has touted portability as a way to stimulate Florida's sagging economy by boosting home sales.

Sean Snaith, director of the University of Central Florida's Institute for Economic Competitiveness, though, doubts it will help much.

"The problems with the housing sector and the economy are far more fundamental than this amendment addresses," Snaith said.