Property Tax Bills Hit Second Home Owners Hard
Owners in the Palm Beach housing market received tax bills this week. Those that reside in the are year-round probably felt okay about the increases (no more than three percent) they witnessed.
Those, however, that have used a Florida mortgage loan on a vacation house in the area? Such snowbirds, as they’re known, were hit with double-digit hikes.
Wes Brown referred to his bill as being “absolutely outrageous.” The retiree, who lives in Tennessee and owns a 1,200-square-foot condo in Juno Beach, had a property tax bill for 2006 that’s set to rise to $7,407, a 33 percent increase from last year and more than double his 2004 bill.
Real estate investor David Dweck, head of the Boca Real Estate Investors Club, was likewise livid. He said tax bills on his properties in Palm Beach and Broward counties rose by as much as $1,000 each.
“This is really ridiculous,” Dweck said. “It affects the entire market because people can’t move.”
Forget affording the costs of a Florida home mortgage, all of a sudden, tax burdens are significant adding to the stress of owning from out of state.
However, for homeowners who live full-time in their Florida houses, tax time is uneventful, even for some of the state’s wealthiest residents. It’s a discrepancy that doesn’t please many hopeful vacationers.
The property tax problem
So, what accounts for this Florida home mortgage loan difference? Why the numerous decimal points separting residents from part-timers? It’s a result of the Save Our Homes amendment to the state constitution that Florida voters approved in 1992.
The measure limits tax increases for owners of primary residences to 3 percent a year, but there’s no cap for owners of second homes, rental properties and commercial buildings. As Florida home prices have soared in the past five years, the tax cap has grown more valuable for homesteaders and more costly for recent buyers and those who don’t have homestead exemptions.
Overall, property values in Palm Beach County rose $28 billion, or 21 percent, in 2006, to $158 billion.
One consequence of Save Our Homes is much different tax bills for neighbors with identical properties, each of whom toom out sinilar Florida home loans, but are now either a winner or loser. While Brown will pay $7,407, a neighbor in the same Juno Beach building, who also owns a 1,200-square-foot unit but has a homestead exemption, will pay $2,094.
“It’s a tax shift, and that gap is getting wider,” said Harvey Bennett, spokesman for Florida TaxWatch in Tallahassee. “It’s an unfair tax situation that needs to be corrected.”State legislators proposed a variety of changes to Save Our Homes during this year’s legislative session, but none passed. Instead, Gov. Jeb Bush formed the Florida Property Tax Reform Committee, which is studying the issue and is charged with offering ways to improve Florida’s property tax system. It meets September 20 in Orlando.
