Title on Ballot: Property Tax Limitations; Property Value Decline; Reduction For Nonhomestead Assessment Increases; Delay of Scheduled Repeal
Sponsor: The Florida Legislature
What it would do:
Reduce the maximum annual increase in taxable value of non-homestead properties from 10 percent to 5 percent; provide an extra homestead exemption for first-time home buyers; allow lawmakers to prohibit assessment increases for properties with decreasing market values.
If you vote yes:
A “yes” vote means you favor the enhanced tax breaks being proposed.
If you vote no:
A “no” vote means you are against the enhanced tax breaks being proposed.
Click here to visit the Florida Division of Elections Background on Amendment 4 (including full text of the amendment)
Summary of Amendment (from Division of Elections site):
(1) This would amend Florida Constitution Article VII, Section 4 (Taxation; assessments) and Section 6 (Homestead exemptions). It also would amend Article XII, Section 27, and add Sections 32 and 33, relating to the Schedule for the amendments.
(2) In certain circumstances, the law requires the assessed value of homestead and specified nonhomestead property to increase when the just value of the property decreases. Therefore, this amendment provides that the Legislature may, by general law, provide that the assessment of homestead and specified nonhomestead property may not increase if the just value of that property is less than the just value of the property on the preceding January 1, subject to any adjustment in the assessed value due to changes, additions, reductions, or improvements to such property which are assessed as provided for by general law. This amendment takes effect upon approval by the voters. If approved at a special election held on the date of the 2012 presidential preference primary, it shall operate retroactively to January 1, 2012, or, if approved at the 2012 general election, shall take effect January 1, 2013.
(3) This amendment reduces from 10 percent to 5 percent the limitation on annual changes in assessments of nonhomestead real property. This amendment takes effect upon approval of the voters. If approved at a special election held on the date of the 2012 presidential preference primary, it shall operate retroactively to January 1, 2012, or, if approved at the 2012 general election, takes effect January 1, 2013.
(4) This amendment also authorizes general law to provide, subject to conditions specified in such law, an additional homestead exemption to every person who establishes the right to receive the homestead exemption provided in the Florida Constitution within 1 year after purchasing the homestead property and who has not owned property in the previous 3 calendar years to which the Florida homestead exemption applied. The additional homestead exemption shall apply to all levies except school district levies. The additional exemption is an amount equal to 50 percent of the homestead property’s just value on January 1 of the year the homestead is established. The additional homestead exemption may not exceed an amount equal to the median just value of all homestead property within the county where the property at issue is located for the calendar year immediately preceding January 1 of the year the homestead is established. The additional exemption shall apply for the shorter of 5 years or the year of sale of the property. The amount of the additional exemption shall be reduced in each subsequent year by an amount equal to 20 percent of the amount of the additional exemption received in the year the homestead was established or by an amount equal to the difference between the just value of the property and the assessed value of the property determined under Article VII, Section 4(d), whichever is greater. Not more than one such exemption shall be allowed per homestead property at one time. The additional exemption applies to property purchased on or after January 1, 2011, if approved by the voters at a special election held on the date of the 2012 presidential preference primary, or to property purchased on or after January 1, 2012, if approved by the voters at the 2012 general election. The additional exemption is not available in the sixth and subsequent years after it is first received. The amendment shall take effect upon approval by the voters. If approved at a special election held on the date of the 2012 presidential preference primary, it shall operate retroactively to January 1, 2012, or, if approved at the 2012 general election, takes effect January 1, 2013.
(5) This amendment also delays until 2023, the repeal, currently scheduled to take effect in 2019, of constitutional amendments adopted in 2008 which limit annual assessment increases for specified nonhomestead real property. This amendment delays until 2022 the submission of an amendment proposing the abrogation of such repeal to the voters.
Arguments for:
Supporters say this amendment would make Florida property taxation more equitable, stimulate the housing and commercial real estate markets and attract investors to the state.
Arguments against:
Opponents say it would shift the tax burden onto new businesses and Florida residents while providing special benefits to out-of-state and non-homestead property owners.
Should the state enhance tax exemptions for non-homesteaded properties and first-time homebuyers?
Amendment 4 extends tax breaks to property owners and first-time property buyers. Its most consequential provisions would:
1) Prevent the assessed value of homesteaded and specified non-homesteaded properties from increasing if the market value of that property decreases compared to the previous year. This would allow the Legislature to eliminate a provision in the current law known as “recapture,” which can cause the taxable value of a property to rise even if its market value drops;
2) Reduce from 10 percent to 5 percent the cap on annual increases in the assessments of specified non-homesteaded properties such as residential rental property, seasonal homes, and commercial property;
3) Authorize an additional homestead exemption to homebuyers who qualify for the existing exemption and who are first-time buyers or have not owned property during the previous three years or longer. The additional exemption would phase out over five years and be equal to 50 percent of the market value of the property but not greater than the median market value of all homesteaded properties in the county where the property is located.
Proponents say the tax breaks will stimulate the housing and commercial real estate markets. They also say it will help property owners in a down economy. Critics say the proposal will hurt cash-strapped school districts, cities and counties already forced to cut services. Total tax revenue losses over a three-year period have been estimated by the state at nearly $1 billion.
The bill to include this amendment on the 2012 ballot passed comfortably in the House by a 105-11 vote, and passed in the Senate by a closer vote of 25-12. Although several questions are raised in this one proposed amendment, voters will be casting a single vote on whether to approve all of them or defeat all of them. As with all amendments on the ballot, passage requires the approval of 60 percent or more of the voters. It passed the provisions in the amendment would take effect Jan. 1, 2013.
History
In 2008, 64 percent of the voters approved a constitutional amendment providing for a $50,000 homestead exemption. The $50,000 is subtracted from the assessed value of an eligible home and property taxes are calculated based on that lower amount. This form of tax relief is reserved for primary residences, meaning the owner must live in the home the majority of the year and not claim any other residence as a primary residence in Florida or in any other state.
In addition to the homestead exemption, state law also caps annual increases in property assessments used to calculate tax bills. Called the “Save Our Homes” provision, it limits the increase in property assessments on homesteaded properties to 3 percent annually or the rate of inflation, whichever is less. Critics complain that Save Our Homes shifts the tax burden for services like police and schools onto the backs of the owners of non-homesteaded properties, people like landlords, commercial property owners and snowbirds. To address that perceived inequity, the amendment that voters approved in 2008 to raise the homestead exemption to $50,000 also placed a 10 percent cap on annual assessment increases for non-homesteaded properties.
A 2010 Proposal
In 2009, after the bubble burst on Florida’s housing market, lawmakers passed a proposed amendment that included a benefit for first-time homebuyers and a reduction in the cap on non-homesteaded property from 10 percent to 5 percent.
The first-time homebuyer benefit was meant to stimulate the housing market by offering new buyers more equal footing with existing homeowners whose assessed values are depressed by receiving the Save Our Homes benefit for years. Reducing the cap on the non-homesteaded properties was meant to give relief to landlords, snowbirds and the owners of commercial property.
The Florida Chamber of Commerce said in 2010 that lowering the assessment cap to 5 percent for non-homestead property was a key to making the tax burden fairer for businesses. Critics of the 2010 proposal feared local governments and school districts would suffer the brunt of further property tax breaks. If approved, the amendment would have cost those local entities hundreds of millions of dollars, state economists estimated. The amendment was opposed by the Florida Education Association.
On May 1, 2009, the final measure passed the Legislature. But the proposal was challenged in court by a group of citizens and labor unions and two months later a circuit court judge ordered them removed from the ballot, finding that its summary lacked details about the measure, such as the dates when the tax breaks would have gone into effect. The state Supreme Court upheld the lower court decision, effectively striking the measure from the 2010 ballot.
Amendment 4
Lawmakers resurrected the 2010 proposal in 2011, adding changes that, for the most part, enhanced the benefits for property owners: They reduced the period of time (from eight years to three) a homebuyer could have previously owned a home and be eligible for the added homestead exemption tax breaks; tweaked the formula for capping the total amount of savings a new homeowner could benefit from the added homestead exemption tax break; and added the provision that allows lawmakers to prohibit an increase in a homeowner’s property taxes in those years when the market value of that homeowner’s property decreases (abolishing the so-called “recapture” rule).
If you vote yes:
A “yes” vote means you favor the enhanced tax breaks being proposed.
If you vote no:
A “no” vote means you are against the enhanced tax breaks being proposed.
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This bundling is simply wrong and should have been thrown out. There are three Amendments here, not one.
The Homestead Exemption law and increasing perturbations should be abolished. Every property owner and business owner should be treated equally. The Recapture law does add some equity to who is paying a fair share of taxes, but it seems part of this Amendment will be eliminate that as well.
The Homestead Act is simply an attempt to buy votes, not manage a State or County. Make the County and State legislature do their job and not allow them to cower behind this Amendment.
Well-stated!
This sounds like pure trickery. Bate and switch in my opinion.
It seems to me that when you have to do and re-do property tax policy, it was either too complicated to begin with, or if it changes as the wind blows, it was not done for the right reasons. It is my suspicion that if the State Legislators want to stimulate the State’s economy, it would be done best by other means other than property tax policy. I believe that if the State of Florida would like to stimulate the economy of Florida, it might best be done by the diversification of the State’s economy. Tax policy should not have to be packaged and sold to the public. It either is or is not a working revenue stream for the public’s benefit. This is being packaged as a business benefit, using the code words of commercial property owners. If the Legislators would like to bring in businesses and hence broaden Florida’s tax base, then targeting specific businesses or industries is the answer. Businesses want stable tax policy, not one that changes with the wind or housing climate. So, I say diversify Florida’s economy and do not depend upon the snowbirds. First things first I say. Stop all of the ala cart tax policy and give incentive to business and monitor the results and make sure that the businesses do as they have agreed to. The constant changing and re-doing of policy gives business very little confidence in what they can expect. That is why business stays clear of Florida as a base of operations. The State of Florida has many ports and hence as opportunity of international import and export of goods and services. Commerce and alternate renewable energy ought to be the cornerstones of Florida’s economy, not, tourism snowbirds and housing. The Legislature is stuck in the store in the middle of the mall and not dealing with the anchor stores at either end of it. Snow birds and housing are not the corner stones or anchor stores for Florida’s future economic prospects. Tourism should enhance and not be the focus of Florida’s economy.
Charles, I really didn’t know what to make of this amendment. Your post is actually very thought-provoking and has lead me to not want to vote “yes.” I wish everyone took the time to post helpful posts like yours.
As soon as I read that the Chamber of Commerce was for it, I’M AGAINST IT!!! I’m voting NO!!!
That makes 2 of us! I believe Rick Scott thinks we’re all stupid. Just amazing!
I make three.
I agree with the earlier post. This is three amendment in one! How unfair!
I want to vote:
“NO” on this, Reduce the maximum annual increase in taxable value of non-homestead properties from 10 percent to 5 percent.
I want to vote:
“NO” on this, provide an extra homestead exemption for first-time home buyers.
I want to vote:
“YES” on this, allow lawmakers to prohibit assessment increases for properties with decreasing market values.
Why was this allowed to get on the ballot bundled??? GRRRR!!
Note that a anyone purchasing a house that hasn’t claimed a homestead exemption in the past 3 years gets a HUGE tax break. Consider someone moving into FL (they have never had a homestead exemption before and the Property Appraiser office will be over loaded to try to find if they ever claimed a homestead in another state). If they buy a $1 million property, they get a $500,000 homestead the first year (10 years of what real Floridians get). Then they get $400,000 the second year, etc. Tax rates will skyrocket for existing residents!
We are landlords, and due to the poor housing market, we’re upside down on our properties but still paying more than we can afford in taxes. For any renters out there that want to vote No, consider again… Your house is owned by people like us that are paying taxes so high on non-homesteaded property we can barely continue to provide housing. We need tax relief so we can continue to have decent properties to offer you. Vote yes, because this affects all of us, not just snowbirds.
Well if you can’t afford the taxes on your rental property, sell it, you probably couldn’t afford it to start with and now you want us tax payers to bail you out….I DON’T THING SO…… You want the best of both worlds….also, you are probably charging the renters too much rent to start with….. You now want a property tax break and you also get a tax breat on your income taxes also…… get real.
Housing Crisis all over again!
If Amendment 4 passes we will see a repeat of the housing crisis that we are just starting to come out of. More foreclosures as unknowledgeable homeowners see sudden rises in their taxes. For first time homebuyers, their tax bills will go up by an average of $2000 by the end of the 5 year recapture period. Can they afford this or will they lose their house to foreclosure?
Not to mention the fact that the cities and counties will be getting less tax dollars and therefore raising the milage rates to offset the tax revenue loss. (Already seen in St Petersburg with the new fire tax controversy). All the other homeowners, investors and businesses will be paying this tax increase and as more first time homebuyers purchase during the 5 year period the loss of revenue to the cities and counties will increase. This will increase the millage rate each year raising everyone’s taxes. If taxes are going up then the increase of the approximately $2,000 that the first time home buyer was saving, will also increase making that first time home even more unaffordable.
This is only part of the story. There are other parts of the Amendment along with Amendment 2 which will also increase taxes for all.
Revenue to the cities and counties will be cut by the military exemption, elderly exemption, the lack of recapture in down markets, the caps of Save Our Homes.
***The definition of a first time homebuyer is someone who has not owned a home in the past 3 years. First time home buyers will now include those who have already short saled their home 3 years prior (this falls under the same guidelines for them to get a mortgage).
a hole lot in one addmendment. I believe that cutting taxes is a good thing at this time. my vote is yes
Bundling all these different amendments together is pulling the wool over our eyes.
Some of them may be ok but on the whole I do not like Amendment 4
With all these amendments and property tax exemptions, the task of funding our
basic services will become increasingly difficult to sustain. What next. A sales tax increase?
Is that what we are heading for?
I read this as not only a tax break, but more importantly as a way to stabilize housing markets and prevent property values from being manipulated by bank created bubbles. I read it as stimulating growth by extending homestead exemptions to new home buyers for additional years. Now I can’t stand Rick Scott, how does this have his stamp on it? Can’t really see it.
I am undecided about this amendment. I am an unhomesteaded property owner as well as a homesteaded property owner. The taxes on my unhomesteaded property are extremely high and it’s difficult to pay them every year. They are so high we have to pay quarterly. I would like someone with expertise in this area to write a comment and give me some sound economic sense on this amendment. I’ve read the other comments and I understand that basic services need to continue, but when the housing market is as it is presently and has been for the past 5 or 6 years, homeowners must have a break as well as unhomesteaded property owners. The tax code needs to be tweaked when the economy is as bad as it is now and has been for the past 6 years. People must have relief! I’ll wait for some comments from those who have some expertise in this area such as real estate brokers, lawyers, economists, etc.