Florida Mortgage Holders Face Lowered Values, Higher Assessments

For Florida mortgage holders besieged by soaring home insurance and rising property taxes, this is the cruel twist no one saw coming.
Even as the stagnant real estate market drags down their home values, property tax assessments for well more than 100,000 Tampa Bay housing market owners will actually increase this fall.

For most, the higher assessment will not cancel out the benefit of the property tax cuts - under $200 on average - just ordered by the Legislature.

But the amount of the savings will be less.

“There’s going to be some sticker shock,” said Ken Wilkinson, Lee County property appraiser.

Wilkinson sounded the alarm during a conference Tuesday of property appraisers at the Celebration Hotel near Disney. And it has many county officials bracing for an avalanche of confused, if not angry, homeowners.

Said Pamela Dubov, chief deputy property appraiser in Pinellas County: “It’s going to be one of the things we’re going to have to spend a great deal of time explaining to people this summer.”

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Declining property values are a rarity in recent Florida history. But this year in Pinellas County, values decreased on 67,000 homesteaded properties. In Hillsborough, 50,000 dipped. In Hernando, 2,800.

Floria housing market values have not taken much of a hit in fast-growing Pasco, where exact numbers were not immediately available Tuesday. But county Appraiser Mike Wells said “quite a few” home values have remained flat.

The same happened across the state. Florida mortgage loan holders of these homes might well have thought: At least falling market values mean lower assessments, and that means lower taxes.

That makes sense - except when government gets involved. In this case, it would be the folks in Tallahassee. They decided that the same voters who approved the Save Our Homes amendment intended that when the values of homesteaded properties go down, tax assessments can still go up.

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No doubt you’re confused.

Here’s what happened. In 1992, voters passed Save Our Homes, which capped annual increases in assessments on homesteaded properties at 3 percent, or the rise in the cost of living, whichever was less. Three years later, in September 1995, Gov. Lawton Chiles and the Cabinet approved a rule submitted by the Department of Revenue.

Before we go into the rule, let’s just say that, to some observers, what they did seems to have been a way to minimize the government’s loss of property tax money under Save Our Homes.

“Why do you think it’s called the Department of Revenue?” Wilkinson said with a smile. “We fought the change but lost.”

A Department of Revenue spokeswoman could not be reached for comment Tuesday.

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What Wilkinson refers to is called the “recapture rule.” You’ll find reference to it on many property appraisers’ Web sites. The rule affects homesteaded properties assessed at less than full market value: that is, properties protected by Save Our Homes.

The rule directs Florida real estate market appraisers to raise the assessed value of these homes up to the cap limits - even if in a particular year, the home’s value stayed the same or declined.

Thus when Chiles, a Democrat, approved the recapture rule, he effectively turned what the voters thought was a cap on assessments into what became, for many homeowners, a mandatory increase. But, until the recent housing bust, nobody had to deal with it.

“This is the first time it has really kicked in,” Wilkinson said.

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