For Some, Taxes Rise as Assessments Drop

As if soaring Florida mortgage bills weren’t enough.

Unique circumstances could make property taxes go up while a home’s value goes down, the Charlotte Sun-Herald notes.

In the confusing realm of Florida property tax laws, down is sometimes up. At this point, is that really surprising?

For example, even though the assessed value of a home may decrease in a given year, the homeowner’s property tax bill theoretically could still increase.

It’s a confusing circumstance that Charlotte County Property Appraiser Frank Desguin expects he will need to confront soon.

“That’s something that we’re probably going to have to deal with this year and next year,” Desguin said. “It’s going to be hard for people to understand that.”

This year is unique because property values in the Sunshine State are on the decline, due to poor Florida real estate market conditions.

All primary homes in Florida are protected through Save Our Homes, a law that places a 3 percent annual cap on assessed property value increases.

The cap keeps property values from skyrocketing like they have in recent years - quadrupling, in some cases, in just a 12-month span.

But ballooning property values create a disparity between the fair market value of a home and the cap-limited assessment used to determine property tax levels.

Think of it this way: A hypothetical home could sell on the market for $300,000, but, thanks to Save Our Homes and the $25,000 Homestead exemption, that property is only assessed at, say, $200,000.

Then the next year, the property’s market value decreases to $250,000 - still much higher than the previous year’s appraisals.

The taxable value can only increase 3 percent, due to Save Our Homes, but it must still go up because the actual market value of the home remains greater than the level assessed for tax purposes.

The end result: Even though the market value of the home decreased, the taxable value would increase 3 percent, to $206,000.

So on top of the Florida home loan payment and insurance, that property tax bill might just be a little steeper despite a sagging market.

“Even though the market value of that property decreased, its taxable value increased. It’s an anomaly I’m sure was probably reflected in some areas,” Desguin said.

That doesn’t mean that a home’s value will increase 3 percent every year, though. If the fair market value of the home were to decrease below $206,000 the following year, the tax bill would reflect that.

But because home and property values skyrocketed so much in the last few years, overcoming that disparity would require a huge decrease in value for some homeowners.

It’s a unique situation that Desguin said will likely confuse those who do not understand how Florida’s property tax and appraisal systems work.

“That’s a situation that affects the taxable value of property that really has very little to do with what’s going on in the market,” he said.

Assessments are only part of the equation, too, as the County Commission sets a mill rate that determines how high the tax bill will be.

Even if someone’s tax assessed value were to increase, a lower mill rate could still lower the final tax bill.

Desguin’s office has tentatively estimated that the county’s total assessed value will increase 4 percent, not including new construction.

If that number holds true when the final numbers are calculated, the Save Our Homes anomaly could contribute to such an increase, he said.

“It’s hard to say right now because we haven’t finalized our just values,” Desguin said.

But the housing slump and Florida’s tax laws have created a perfect storm that could confuse homeowners who may pay higher property taxes this year despite a decrease in property value.

“There are a lot of homestead properties in Charlotte County, relatively speaking,” Desguin said.

“And so a lot of those, even if their market value remains static or decreased a little bit, their taxable value probably increased 3 percent.”

Save Our Homes places a 3 percent cap on the annual jump of assessed property values. Because of it, the actual market value of a home may decrease while the value assessed for tax purposes could increase.

SOURCE: Charlotte Sun-Herald