Florida Realtor Says Save Our Homes Act Kills Housing Market

Steven L. DuToit, head of Team DuToit at Keller-Williams Sarasota’s Main Street office, has a radical idea for a Realtor.

He wants to junk a holy cow of Florida real estate finance: the 3 percent annual cap on homestead property tax increases.

DuToit has been a resident of Sarasota since 1986, coming here from Marshalltown, Iowa. He has 32 years of experience, and has historically sold a home about every three days. He’s married, has two children and two grandchildren, and holds a license to be a Florida mortgage broker.

In interviews, correspondence and analysis conducted by Herald-Tribune writers Stephen Frater and Maurice Tamman, DuToit comes out squarely against the 3 percent cap, one of the first and most prominent Realtors to do so.

How we got here
Twelve years ago, the Save Our Homes constitutional amendment gripped homesteaded property owners’ taxes and held them firm despite massive property value appreciation.

It worked exactly as designed: It capped annual property assessment increases at 3 percent and disproportionately shifted the burden of supporting local government to nonhomesteaded property owners - to snowbirds, businesses and landlords.

But over the years, the program that was supposed to save little old ladies from being forced from their homes has turned into a property tax cash cow largely for the rich.

It transformed a system that made sense, where the most valuable property got taxed the highest, into a snarl of inequities.

Today, your tax bill can be thousands of dollars higher than your neighbor’s, even if your homes are identical. Millionaires in mansions on the water pay the same taxes as middle-class Florida home mortgage borrowers in cookie-cutter subdivisions.

A decade after taxpayers revolted against the system, their solution, Save Our Homes, is turning Florida into a place where more and more of the tax burden is being borne by fewer and fewer people.

Families, unable to afford losing their tax protection, have become trapped in their homes. Overtaxed businesses are selling out to condo developers. Landlords, businesses and second-home owners now pay most of the state’s property taxes, even though they own about the same amount of property as homesteaders.

DuToit’s proposition
“It is my position that the homestead 3 percent cap on property tax increases is playing a significant part in our declining real estate values, reduced real estate sales activity and increased inventory of homes for sale,” Dutoit said. “I believe that it is necessary to eliminate this cap and it’s time to equalize the property taxes in Florida.

“Existing homeowners are handcuffed to their homes. They cannot sell and buy without substantially increasing their property taxes. Their property taxes could double, triple or more.

“This causes hundreds of sales to be lost in our market and millions of lost revenue to our local economy.

“Seasonal residents are selling and relocating to other states due to unfair taxation. They are paying two or three times as much as homesteaded property owners. As part-time residents they should not be penalized; they spend half as much time here and are less of a drain on our local resources.

“Seasonal residents who would later become permanent residents are not buying here. Seasonal residents typically become permanent residents and fuel our local economy, resulting in hundreds of real estate sales annually. The loss of these real estate sales and local growth, plus the trickle-down effect it has on other businesses, is costing our economy dearly.

“Investors are in the market for cash flow, tax advantages and potential appreciation. Currently, the high taxes caused by the homestead cap and increased insurance rates have deteriorated or eliminated the cash flow on residential investment properties.

“A result is that investors have placed their rental properties for sale and are not buying because of the negative cash flow.

“All of the above issues have caused the inventory of residential real estate to increase over 500 percent and sales to decrease over 50 percent in the past 20 months.

“Our local economy is dependent on real estate transactions. Builders, Realtors, home inspectors, appraisers, title companies, attorneys, home repair companies, designers, decorators, movers, furniture companies, and all construction-related industries are all affected when an existing or new home sells.

“Also, the state government receives transfer fees, [Florida mortgage], note fees and recording fees for each real estate transaction and will experience much lower revenues. It is imperative that we equalize property taxes and continue to work toward property insurance relief in order to insure a healthy economy for our state in the coming years.”

SOURCE: The Herald Tribune