How Florida Engineered its Real Estate Tax Windfall… and What Comes Next
In the midst of the debate over how to cut property taxes, state lawmakers relish pointing fingers at local governments for reaping the benefits of the Florida real estate market boom without lowering taxes.
But they fail to mention that the state has enjoyed its own windfall from a little-known real estate tax, and it has never moved to slash it back.
The culprit: Documentary stamp fees.
Income to the state from the stamps grew 266 percent, to $4 billion, between 2001 and 2006.
The tax is collected every time there is a closing on a real estate deal or a Florida mortgage refinance, at a rate of 70 cents on every $100 of real estate value.
As low Florida mortgage rates fueled a refinancing boom and property values increased, the state has been raking in money.
The tax on a $250,000 home: $1,750, paid as part of closing costs.
But rather than lower the tax to ease the burden on property owners, the state legislature used the ballooning “doc stamp” account to pay for programs.
“The money, quite frankly, was needed to balance the budget,” said House Speaker Marco Rubio, the West Miami Republican.
This year, the well documented (no pun intended) real estate slump, which has meant dramatically fewer sales and Florida mortgage refinancing needs, is now expected to reduce doc stamp collections to $3 billion - still twice as much as it was before the real estate boom took off in 2002.
But as House leaders push ahead on plans to lower local property tax rates by requiring local government to roll back tax rates to pre-boom levels, they have no intention of reducing the documentary stamp tax.
“It’s a one-time tax,” Rubio said. “It’s not an ongoing tax you pay year-to-year, like property tax.”
County officials, whom Rubio has criticized for putting forth “no meaningful” alternatives, say they want to fix the state’s property tax system, but they also want the state to shoulder its share of the budget cuts.
Under two separate proposals by House Republicans, local governments would have to roll back property tax levels based on either 2001 or 2004 budget years - to save taxpayers between $5.5-6.7 billion across the state.
One plan, requiring a constitutional amendment, would completely eliminate the property tax on homestead exemption property and replace some of that lost revenue with up to $9.2 billion in new state sales taxes.
“How much has the state budget grown over the same period of time?” asked Broward County Commissioner Ilene Lieberman. “Because, if we want to give meaningful relief, it has to happen at all levels of government.”
Continue reading in the Miami Herald …
