Palm Beach County Property Taxes: The Rich Get Richer
The rich in the Palm Beach County housing market are reaping a disproportionate share of the tax breaks from the voter-approved Save Our Homes law aimed at helping longtime residents stay in their homes, a South Florida Sun-Sentinel analysis of property records shows.
The biggest beneficiaries: an elite class with homes worth an average of $1.8 million. Their palatial homes and waterfront mansions comprise only 4 percent of Palm Beach County’s stock of homesteaded properties, but they get one-fifth of the financial benefit of the tax-cutting Save Our Homes constitutional amendment.
For these 10,962 homeowners, almost half their property values go untaxed, according to the paper’s analysis. By comparison, another group of Florida mortgage holders with $194,000 average property values sees less savings - 35 percent off their taxable value.
The reason: the county’s most expensive homes, clustered on Palm Beach and other barrier islands, have appreciated faster than those in middle-income neighborhoods during the six-year housing boom.
Palm Beach County has 2,180 homes with at least $1 million in untaxed value, up from just 318 in 2001.
Celebrities such as radio personality Rush Limbaugh, golfer Jack Nicklaus and Tampa Bay Buccaneers owner Malcolm Glazer are among those with the biggest savings.
“I love it, obviously,” said attorney Bob Montgomery, who saves $265,000 in annual taxes on his $24 million Palm Beach mansion. He still pays $173,000 in property taxes per year.
“I pay it with a sigh of a relief and a thanks to the heavens,” Montgomery added.
It’s another quirk in the 1992 Save Our Homes law, which is under heavy scrutiny in the state Legislature because it gives big tax breaks to longtime homeowners/Florida mortgage loan borrowers while snowbirds, renters, businesses and new homebuyers languish. Analysts for a legislative committee warn that the system is “highly skewed” toward the wealthy.
“There’s a huge inequity,” said Commissioner Mary McCarty, who benefits greatly from Save Our Homes because she pays taxes on less than a quarter of her Delray Beach home’s $982,000 market value. “It’s not fair, but when the people of Florida were asked to vote on this, they weren’t asked to vote fair. They were asked to vote in their own self-interest, which they did.”
In all, Save Our Homes, which caps annual increases in taxable value on homestead residences at 3 percent, wiped $47 billion in property values off the tax rolls in Palm Beach County last year, compared with $4.7 billion in 2001.
It saves taxpayers an average $3,126, but the savings are distributed unevenly. The wealthy get super-sized tax breaks. Jimmy Buffet’s Palm Beach mansion is worth $17.9 million, but taxed at $5.9 million - a 67 percent discount.
To be sure, Save Our Homes hasn’t shielded the rich from eye-popping tax bills. Investor Lawrence J. DeGeorge pays taxes on less than 40 percent of the $5.9 million value of his waterfront home in Jupiter, but he said he hardly feels fortunate. His tax bill: $47,500.
“I don’t know whether I’m paying too much, but I’ll bet you the top 20 percent are paying 80 percent of the property taxes,” he said.
Indeed, the top 4 percent of owners in the newspaper’s study shelled out $197 million in taxes - almost 20 percent of the total paid by property owners who benefit from Save Our Homes.
The newspaper’s analysis did not include homes that derive no benefit from Save Our Homes, either because the owner recently purchased the property or otherwise does not qualify for a homestead. There were 312,052 homes and Florida condos included in the study, just over half the county’s total number of commercial and residential properties.
Even as critics say Save Our Homes has created inequities that must be addressed, they warn against solutions that could deepen the disparities. For example, House Speaker Marco Rubio’s proposal would eliminate homestead property taxes in favor of a 2.5-cent hike in the sales tax. Limbaugh would pay no property taxes under this plan, saving him $429,376.
“Certainly, if the 2.5-cent sales tax goes through, it would make it worse. The people who could least afford it would be the most impacted,” said County Commissioner Burt Aaronson. His argument: Low-income renters will be hit hardest by the increased costs for everyday items, except for food and medicine, which are not taxed.
While Save Our Homes is a huge boon to high-end homeowners, particularly those who bought many years ago, it isn’t much help to people such as Janet Newman.
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