Tax Realty Consultant

College Park homeowner Renee Maloney would like to move to a larger house.

“I am in an older home; the bedrooms are small,” Maloney said.

But she’s waiting.

If voters approve a property-tax amendment Jan. 29, Maloney and other Florida homeowners could transport the tax savings they now get on their homes to their next address.

If the measure fails, moving will be a lot more expensive for Maloney.

The question most voters are likely wondering: What’s in it for me — how much could I save?

The proposal would cut taxes several different ways, but it’s the portability of built-up tax savings that offers the biggest payoff, promises the most help for the housing market and defies easy explanation.

The biggest beneficiaries of portability may be homeowners who move into slightly more expensive houses that are in places with lower tax rates. They could end up with less taxes and more house.

The biggest losers, by the way, would be the local governments that would get less tax revenue. Or the people employed by those governments who could lose their jobs in budget cuts.

For years, homeowners have said they have felt trapped in their homes — unwilling to move because they could lose what may amount to thousands of dollars in tax savings.

Since 2003, while the real-estate market boomed, sales of homes with homestead exemption declined every year, according to the state Department of Revenue.

“This may lend support to the existence of a lock-in effect where homeowners feel compelled to stay in their existing homes — at least longer than they otherwise would have — because of tax advantages,” according to a legislative property-tax report published earlier this year by the state Office of Economic and Demographic Research.

“If people see an opportunity to move up, especially with prices coming down, and if we got some portability, this might be a big incentive for them to move,” said Maloney, an Orlando mortgage consultant.

And where they take their tax break could make a big difference in how much they save.

The state Department of Revenue recently released the general operating tax rates for 385 cities and 67 counties in the state. Within many counties, local tax rates for city and county general operating funds differ enough that property owners could save $900 on a house with a taxable value of $300,000 if they moved from a high-tax city to a nearby one with low taxes.

In Seminole County, for instance, Altamonte Springs’ general operating tax rate is $2.43 per $1,000 of taxable value. In comparison, Sanford’s rate is $6.32. On a house worth $300,000 to tax assessors, the difference between living in Altamonte and Sanford would be about $1,167 a year.

Sanford Mayor Linda Kuhn said low taxes might turn a few heads if voters approve portability, but most people move to Sanford for its large historic district, lakeside setting and relatively affordable homes.

“People have chosen to live in Sanford for various reasons,” she said. “There are a lot of things that brought them here.”

In Orange, Windermere had one of the lowest tax rates. Mayor Gary Bruhn said low taxes might be a draw for people who are suddenly interested in moving, but the attractive tax rates are really secondary to Windermere’s abundance of lakefront property and small-town feel.

Bigger house, bigger break

If voters approve the measure, which would apply retroactively to home purchases made in 2007, buying a more expensive house would bring bigger overall savings than buying a cheaper one. Of course, the more valuable the house, the more the new owner will have to pay in property taxes.

Of the homeowners who opt to move to another home within the state, the overwhelming majority could transfer their full tax break, according to a recent study. The legislative property-tax study released earlier this year reported that three out of four Florida homeowners relocating within the state purchase a more expensive home.

Maloney, for instance, owns a house with a market value of $289,843, but she only pays taxes on $226,375 worth of value because of the Save Our Homes exemption. So her exemption totals $63,468.

If she upgraded to a house with a market value of $600,000 on the tax rolls, her tax bill would be $5,825 to $7,547 — depending on which taxing districts she lands in — according to the Orange County Property Appraiser’s Office. That includes the tax breaks from the existing homestead exemption and the proposed second homestead exemption. Her savings: $1,466 to $2,554.

Moving to a less-expensive house is another story. Under the proposed tax plan, homeowners relocating to less-expensive homes get the same percentage of exemption they got at their previous address. So an owner whose home was taxed at half its market value in his last house would get half the value exempted from his next house.

In Maloney’s case, she pays taxes on about 78 percent of her home’s market value. If she moved to a house worth less than her College Park home, she would pay taxes on 78 percent of the new home’s value.

If she bought a house valued at $200,000, her tax bill with portability would be $1,357 to $1,716. Without it, she would pay an additional $978 to $1,148, according to a portability calculator on the Orange County property appraiser’s Web site.

It’s a better option than starting over with no tax break, she said.

“Even if you downsize, quite probably your taxes are going to go up if you don’t have portability,” Maloney said. “Literally, people can’t afford to move.”

Cuts in services predicted

The tax plan would take a big hit on local-government budgets. It would cut as much as 39 percent of revenues from Windermere’s coffers, Bruhn said.

Statewide, new estimates released Friday report about $9.3 billion of tax reductions during five years, including $1.5 billion in cuts for schools. Opponents of the amendment say the money individuals would save is not worth the cuts in services. Labor unions and others are lining up to fight the proposal and the potential job losses it could bring.

Orange County PTA mom Joanne Johnson said she’s not necessarily against tax reform.

“I’m just very concerned about the fallout that will happen when cities and counties do not receive as much,” she said.

Johnson said she uses libraries, parks, roads, schools and other government services. The tax package would benefit her financially, but that’s not enough to win her support.

“Yes, it would benefit me personally, but how is it going to benefit our leaders of tomorrow? . . . We need to speak on all of our children’s behalf.”

To pass, the amendment needs the approval of 60 percent of voters. Most residents would be unlikely to see any immediate tax savings from portability. The state legislative report found that only about 3 percent of Florida homeowners sell their homes and relocate in the state per year. That represents about 140,000 homes, the property-tax study stated.

For homeowners who don’t move, their savings from another part of the proposal — the increase in the homestead exemption — would amount to about $20 a month on average.
http://www.orlandosentinel.com/community/news/windermere/orl-lidportability1707dec17,0,842015.story?coll=orl_tab02_layout

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