Florida Real Estate Insiders: Property Tax Reform Failed

Legislators had an opportunity to breathe new life into a sluggish Florida housing market with tax reforms - but didn’t take advantage of that, according to local experts.

Elderly couples who can barely afford to stay where they are could still spend more money downsizing because of an omission in the new property tax reform, some Realtors say.

“It’s too bad they left out portability because that was a key issue,” said Ron Cornette, marketing and training director at Wagner Realty.

Portability would have allowed those moving from a homesteaded home to a new home within the same county to transfer tax benefits from one home to another.

“Insurance and taxes used to be incidentals, they never used to be deal makers or breakers,” said Patrick McGuire, Florida mortgage broker associate for Coldwell Banker.

Lakewood Ranch Realty broker Milt Flinn said any reform is better than none at all.

“We’re encouraged by what they did and hopefully it will pass. Anything that helps homeowners helps us,” Flinn said.

Portability was key in helping a suffering California real estate market in the late 1970s and Flinn thinks the so-called “super exemption” could serve the same purpose. The super exemption is an option that allows homesteaded homeowners to take a great reduction of the taxable value of their homes but at a cost of eliminating the appraisal cap put forth by Save Our Homes.

But many think the super exemption is super confusing.

“It’s a short-term savings that nobody seems to be able to figure out,” Cornette said.

It’s the confusion that has Manatee Association of Realtors President May Aston waiting to see what effect this will have on buyers’ perspectives.

“It’s too early to tell because a lot of people don’t understand it yet,” Aston said. “It’s a little confusing, but at least the consumers see something happening and that Gov. Crist is doing something to help.”

Taxes and insurance are just different aspects of the real driving force behind the real estate market - consumer confidence. Potential Florida mortgage borrowers simply don’t have faith things will turn around. Why buy if that’s the case?”It comes down to perception and, in real estate, perception is reality,” McGuire said.

While rollbacks to lower prices will help many, Aston and others had expected the numbers would roll back even further to 2004 prices.

“Property values and taxes were already pretty high by 2005-2006,” Aston said.

However, rollbacks in taxes coupled with the rollbacks in housing prices may give the market more hope.

“Prices have rolled back about 20 percent from the height of the boom, and lower prices roll back the tax amount and even the insurance amount,” McGuire said.

While rollbacks will help, extra savings offered to homesteaded Florida mortgage loan holders may keep them in their current homes, anyway.

“Most people are of the consensus that unless you improve the scenario for the second-time homebuyer and the seasonal homebuyers, not much is going to change,” McGuire said.

It’s naive to think that only assisting the homesteaded people will have a great effect on the real estate market, he added.”We’ve got to bring both taxes and insurance under control because they’ve just gone crazy in the last few years,” Cornette said.

Aston agrees, but is encouraged that steps have been taken in the right direction.

“It’s definitely a good start,” Aston said.

SOURCE: The Bradenton Herald