Current Real Estate News - TORONTO

Large tax cuts needed to revive housing market, Broward real estate agents say

By Anthony Man
Political Writer
Posted June 8 2007

Fort Lauderdale -- A delegation from Broward County's real estate industry implored state Rep. Ellyn Bogdanoff, R-Fort Lauderdale, on Thursday to push for the deepest possible property tax cuts during next week's special legislative session.

Several of the 15 real estate agents and others who work in related areas told Bogdanoff that the escalation in property taxes during recent years has helped choke their business -- and threatens more far-reaching damage to the regional economy.

 "It has to be made affordable again. That is the issue," said Diane Hedges, an agent with Coldwell Banker in Fort Lauderdale.

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From Fort Lauderdale Sun-Sentinel - June 08/07

Retirees getting caught in South Florida’s property tax squeeze:

MIAMI – June 7, 2007 – After Kimrey Newlin retired two years ago, he and his wife moved closer to their grandkids, leaving the $1.2 million Key Biscayne house they had lived in for 27 years for a $545,000 home in the Falls.

Now they're 10 blocks from the kids, and a hand-painted lawn ornament in the front yard declares: "Grandma's House. Kids Spoiled Here. Cookies and Milk."

But the Newlins are paying for the move. Although the new place costs less than half the old one, their property taxes jumped to $9,000 from $6,400.

The couple are among a large and diverse group of seniors who find Florida's property-tax crisis especially vexing. With many older residents living on fixed incomes, they are being hit with the rising cost of owning a home as they juggle increased prices for things such as food, gasoline, insurance and medical care.

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TALLAHASSEE -- Florida homeowners would see their property taxes drop by an average of 7 percent this year -- and much more in subsequent years -- under a tax-cutting agreement unveiled by legislative leaders Friday night.
 

Crafted by a handful of Republican House and Senate negotiators who have been meeting out of the public eye for weeks, the sweeping proposal will be considered by all 160 state lawmakers when they begin a 10-day special session Tuesday.

"This is, by far, the largest tax cut in Florida's history," House Speaker Marco Rubio and Senate President Ken Pruitt said in a letter to colleagues detailing the proposal.

The two-stage plan, intended in part to kick-start Florida's stalled real estate economy, would save taxpayers almost $32 billion over five years -- $15.6 billion from a tax cut reflected in this fall's property tax bills and another $16 billion if voters agree next January to supersize Florida's homestead exemption.

"We have done it in a way that is responsible and provides benefits to all property owners," said Rep. Dean Cannon, R-Winter Park, the chief House negotiator. "We focused our relief towards the Floridians who need it most: Florida's middle-class families and small businesses."

Gov. Charlie Crist, who spoke with Rubio and Pruitt about the plan Thursday, said "things look very positive for getting this done" when lawmakers reconvene June 12-22.

Here's how the plan would work:

All Florida homeowners -- permanent and part-time residents alike -- as well as commercial property owners would benefit this year from a rollback of the property taxes levied by cities, counties and special taxing districts, including the South Florida Water Management District and hospital districts. The average homeowner would save $174 and businesses, $199.

Cities and counties would be required to freeze taxes at 2006 levels, then forced to cut them by 0 to 9 percent, depending on how much they raised taxes in the past five years. Governments whose taxes had gone up the most would face the biggest cuts.

Palm Beach County government would have to cut its taxes by a total of 9 percent; Broward County taxes would be trimmed by 5 percent.

Cities like Belle Glade and Southwest Ranches, which have decreased property taxes on their own in recent years, would not have to roll them back any further. But Lake Worth and Lauderdale Lakes, for example, whose increases were well above the Florida average, would have to prune taxes by the maximum 9 percent.

Future revenue growth for cities and counties would be capped based on the growth of personal income in the state.

Local governments will be able to override the cuts and the cap, however, with a supermajority vote, a unanimous vote or a referendum -- depending on how much they want to boost taxes.

School taxes, about one-third the average homeowner's tax bill, would not be affected the first year. Florida voters would be asked to change the state constitution and approve the second phase of the tax plan -- increasing the homestead exemption -- in a special election Jan. 29, the same day as Florida's presidential primary . Under the proposed change, homesteaded property would be given a 75 percent exemption for the first $200,000 in value. For instance, on a $200,000 home, the existing $25,000 homestead exemption would jump to $150,000, leaving only $50,000 to be taxed. Another 15 percent exemption would be allowed for the next $300,000 in value. There would be no further exemption for homes worth more than $500,000.

The minimum homestead exemption would become $50,000.

This tax break would continue to apply only to permanent Florida residents' primary homes, providing no extra benefits for snowbirds or business owners.

House and Senate staff estimate 73 percent of the state's residents now entitled to the constitutionally enshrined Save Our Homes tax benefit would save more under the new plan. Those who don't would be able to keep their Save Our Homes protection until they move.

Property taxes for schools would be reduced in 2008 by the constitutional changes, but Rubio and Pruitt vowed the state would make up the difference -- a revenue cut of $1.5 billion the first year and total cuts of nearly $7.2 billion by 2011. (Broward school taxes would drop nearly $142 million in 2008, and Palm Beach County's, nearly $121 million.)

But some legislators are already voicing doubts the state will make good on that pledge.

"The Legislature raised people's property taxes this year by more than $500 million to pay for schools -- and you're going to believe we'll come up with billions to help education? Then I have a bridge to sell you," said Senate Democratic Leader Steve Geller of Cooper City.


Linda Kleindienst can be reached at lkleindienst@sun-sentinel.com or 850-224-6214.

Lower housing prices expected with sales continuing to drop

Associated Press
Posted June 6 2007, 11:02 AM EDT