South Florida Mortgage Holders, Residents React to Property Tax Problem

When John Engelhart’s father bought a two-bedroom summer home in 1959, his intentions were to keep the Delray Beach house in the family for generations.

The Engelharts divided their time between Michigan and South Florida. After his parents died in the 1980s, Engelhart, his wife and four children carried on the tradition, spending summers in South Florida.

But Engelhart, a retired businessman and World War II veteran, said he can no longer afford the tax bill on the 1,500-square-foot waterfront house his father purchased for $43,200. It is now valued at $885,607. The 2006 property tax bill: $19,647.

“As a businessman, you got to face the reality,” said Engelhart, 81.

He said he’s staying put for a year, hoping that state legislators will find a solution to the state’s property tax crisis that is fair to all property owners. But he’s preparing for the worst and he’s already selling his boat.

Engelhart is one of many South Florida residents who responded when the South Florida Sun-Sentinel asked readers to tell us how they are coping with high property tax bills.

Some, like Engelhart, are thinking about selling their properties, which have become a financial burden because of rising taxes. Others are full-time Florida mortgage holders who feel stuck in their homes because they can’t afford to give up their current tax breaks to buy homes with higher taxes.

Owners who live full-time in Florida can take advantage of a 3 percent limit on annual property tax increases as long as they keep the same home. It is not available to snowbirds or absentee owners.

In an attempt to end inequities in the current tax system, legislators are considering a range of options during their current session. Among them: increasing sales taxes and reducing or possibly abolishing property taxes altogether; and offering tax breaks for first-time home buyers, Floridians who want to move, snowbirds and small-business owners.

But as legislators debate these issues, local residents - landlords, renters, homeowners - worry about the future at a time when living in the South Florida housing market has become more costly because of rising hurricane insurance premiums, taxes and other costs.

Robert Guthrie, 37, said he exchanged his BMW for a Toyota more economical car and halted plans to start remodeling projects on his two-bedroom home in Oakland Park after he was told his tax bill this year would rise, on top of increases he faced in property insurance and other costs. Guthrie and his partner, Thomas Williamson, bought the 1,200-square-foot home for $216,000 four years ago. His tax bill for 2006 was $5,779.

Guthrie said his neighbor, who lives in an identical home, pays $2,960. Her bill dropped $80 this year.

“We’ve talked about selling but where are we going to find anything affordable around here?” said Guthrie, a Florida mortgage loan consultant. “We are stuck.”

Ruth Cohen, 78, said keeping a second home in Florida has become a financial burden for a snowbird like her. So Cohen, a retired teacher who lives on a pension, Social Security and savings, is selling her two-bedroom villa in Delray Beach. She plans to rent when she makes her annual trip to Florida from New York. The change will provide more disposable income that she can use to travel.

“I’m a practical person and when I added up everything [property taxes, insurance and maintenance] it is costing me about $15,000 to live here for four months,” Cohen said. “I realized that this situation is unaffordable and I had to make a life decision.”

This is exactly what Mario Becerra, of Boca Raton, said he fears: that he would have no option but to sell his properties because he won’t be able to afford the increasing tax bill. “I fix everything on my properties because I can’t afford to hire a handyman,” said Becerra, 38.

Becerra and his wife Linda, 52, own three properties - a condo and a home that they rent for income and a condo that is their primary home - with a combined property tax bill of $12,872 last year.

They said they had to increase rents on their tenants to make a small profit. But they worry that next year will be worse for them.

“What is the benefit of owning a property if I have to pay so much on property taxes?” Mario Becerra asked.

SOURCE: The Sun-Sentinel