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Taxes are bleeding the property gain increases out of the homeowners pockets into the pockets of the taxing authorities.  What can be done?

Recently I attended BankUnited’s seminar on Minimizing Your Property Tax.  Broward County’s Property Appraiser, Lori Parrish was one of the main speakers, and she helped explain to the group that there are several proposals on the table that are attempting to change all that.

Here are some of them:

• Lori Parrish supports adopting a new constitutional PORTABILITY Amendment allowing homestead owners to move their sheltered, Save Our Homes (SOH), value from one primary residence to the next one in the same county under a governmental “local option”.   This can be pretty confusing so I have tried to come up with a real world example to help explain the impact of this proposed change.   
  • Assumptions:
    • You have a home that has a current market value of $300,000
    • Because of the current law the assessed value can only increase a small amount per year which (for this example) the current assessed value is $175,000.  This would mean that the “sheltered amount” (aka SOH) is $125,000(which includes a homestead exemption of $25,000).
    • Taxes run about 2% of the assessed value so the current taxes are about $3500
  • With Portability:
    • You sell the home and buy a $500,000 home
    • New purchases are assessed at about 85% of the market Value, which would be $425,000
    • You would “Move” the SOH to the new home reducing the assessed value to $300,000
    • At the same 2% tax rate, taxes on this new home would be about $6000, a $2500 increase in taxes, that’s about $200/ month additional
  • WITHOUT PORTABILITY
    • You sell the home and buy a $500,000 home
    • New purchases are assessed at about 85% of the market Value, which would be $425,000
    • You would get the “Homestead Exemption” of $25,000, reducing the assessed value to $400,000
    • At the same 2% tax rate, taxes on this new home would be about $8000, a WHOPPING $4500 increase, that’s almost $400/month additional

  In this example you would end up paying $2000/ year less in taxes.  This would also work to the advantage of those wishing to downsize, and in those cases they would pay substantially less taxes or, in some cases, NO TAX AT ALL.  This will make it much easier for people to scale up or down instead of being stuck in their present homes.  

• Some other ideas kicked around: increase the sales tax by 2.5 cents, then substantially reduce or eliminate property taxes altogether.
• Another idea is to use 2001 as the tax base year, before the huge increase in homes values.
• My husband’s idea is to reduce the millage rate to a point where the taxing authorities are getting the same income as they did in 2001(plus annual cost of living adjustments)

We already voted for doubling the Seniors’ Homestead exemption from $25,000 of assessed value to $50,000 of assessed value.

The BOTTOM LINE! Lori Parrish‘s LOUDEST plea, is for us to take action and attend our local city meetings and make our voices heard.  She said, and I agree, we must go and attend even the school board meetings because they impact the city budgets for which we pay taxes.

She also explained that ONLY in even numbered years can we vote for tax changes. So we can vote Sept. 2007 but it’ll have no impact until Nov. 2008. It is not retro active, our taxes are paid in arrears. Which means at least another year and a half of “Pain in the Wallet”.

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Woah… Everyone in Florida is reeling after they received their new homeowners insurance bill.

I’ll tell you some steps you can take to lower your premiums (steps that NOT everyone else will mention).

• The massive insurance reform bill that passed in February, 2007 allows homeowners covered by a private carrier to opt into Citizens (the Florid State Run Insurance pool) if they’re paying rates 25% higher than what the state run insurer charges. This is unlikely, but might be your situation.

• Another reduction could come from asking your insurance agent to give you the name of a Windstorm Mitigation inspector. You pay $150 for the inspector to come out and inspect your property. Then in about 72 hours he will issue you a Windstorm Mitigation Certificate that you should promptly give to your insurance agent. The newer the home, the more likely it will be that it has the upgraded hurricane resistant construction features like upgraded roof supports (trusses), and hurricane shutters that were mandated in South Florida Building codes after Hurricane Andrew in 1991. I had my home inspected and it has saved me $1,726.00. This reduction is then applied every year. Many times if the inspector can’t save you money on your policy, they will refund you the $150. Check their money back guarantee before you lay down your cash.

• Another way to reduce your premium is to increase your deductibles. Change your “all perils” deduction (which includes fire, theft etc. anything other than a named hurricane) from a fixed deductible to a percent. Here is an example; if you currently have a $1000 deductible and instead increased your deductible to 1% of the total coverage. This alone would save from hundreds to thousands per year (based on the value of your property).

You need to have a serious discussion with your insurance agent. But DON’T settle for a “That’ll only reduce your premium by a few bucks” answer. INSIST on exact numbers. Keep in mind that your agent is motivated money, and what you are asking him to do is reduce his income, he makes a percent of your yearly premium. So he really doesn’t want it to go down. Suggest that if he can’t or won’t sharpen his pencil then maybe you will be looking for another carrier or another agent. ALSO, We all need to voice our concerns to our representatives in the Florida legislature. Let them know that the insurance companies, who inflate rates and are complaining that insuring South Florida homes is so expensive, while at the same time reporting RECORD profits, are not fooling anybody; and it is the legislature’s jobs as our elected representatives to protect US, their constituents, from insurance companies and their unfair practices. Here is as link to the Find your legislators site. Send your representatives emails and tell them to act. http://tinyurl.com/2ylp4f