Archive for June, 2007

Fun things to do in South Florida

Saturday, June 30th, 2007

We have added a page to the site for linking to fun things to do in South Florida. My wife and I are always searching for fun, educational, and affordable things to do with our son in Palm Beach, Broward, Boynton, and all of the surrounding areas of South Florida. If anyone coming to the site has suggestions of links that should be added to this page. Please post a reply with the information that you would like to see.  If you do not see a comment box below, click here.

Are Local Florida Counties Fighting Property Tax Cuts Inspite of Reserves?

Tuesday, June 19th, 2007

Florida City and county government officials are accusing Gov. Charlie Crist of deliberately putting out false information in an effort to win property-tax cuts.

They’re reacting to Crist’s assertion that local governments are fighting property-tax cuts even as they sit atop $9 billion in reserves. Local officials say the governor’s “reserves” are grossly inflated, lumping general-fund reserves from unspent property taxes with other pools of money, including debt reserves and money for construction projects.

Read full article Here

Florida Special Session on Property Tax Has Adjourned

Friday, June 15th, 2007

The Florida House of Representatives and Senate passed all three bills making up the Florida property tax reform package. The package includes a statutory rollback and cap of real estate tax rates, a proposed constitutional amendment creating a Florida “super homestead exemption” and a bill designating the upcoming January 29, 2008 presidential preference primary as the date for Floridians to vote on the “super homestead exemption” amendment.

Here is an overview and outcome of the special session broken down by the specific issue:

Statutory Millage Rate Rollback

  • Millage rollbacks will be required of cities, counties and special districts for FY 2007-08 taxes (November 2008 tax bills). Rollbacks will not be required for school taxes.
  • Rollback required will be to 2006-07 revenue levels, plus an additional cut based upon a local government’s 5-year history of property taxes on a per capita basis compared to statewide average taxes on a per capita basis.
  • Statewide average will be calculated separately for cities and counties. Cities and counties will be required to rollback 0% to 9% (0, 3, 5 or 9%).
  • Special districts will be required to rollback and cut 3%.
  • Local governments can override the rollback by extraordinary vote.
  • Vote required is:
    • 2/3 to exceed reduced level + tax on new construction up to 2007-08 revenues;
    • unanimous to exceed 2007-08 “rolled back rate” and go up to 2006-07 actual millage rate;
    • voter referendum to exceed the 2006-07 actual millage rates.

 

Comments

  • Provides potential for across-the-board tax relief in estimated amount of $15.6 billion over 5 years.
  • Does not apply to school taxes (approximately 40% of the property tax bill).
  • Requires greater reductions from those cities and counties who increased taxes the most on per capita basis between FY 2001-02 and 2006-06.
  • Not applicable to debt service millage, so tends to favor local governments that relied upon bonding over those who paid cash.
  • Municipal service taxing units and dependent districts, the predominant purpose of which is emergency medical or fire rescue services, are treated like independent special districts.
  • Cities and counties of “special financial concern” receive preferential treatment.
  • Revenues used to fund public hospitals in counties that levy hospital surtax receive preferential treatment.

Statutory Caps on Millage

  • Future millage increases after FY 2007-08 for cities, counties and special districts will be limited to the “rolled-back rate,” (rate that produces same taxes as prior year, exclusive of taxes from new construction) plus growth in personal income.
  • Local governments can override the cap by extraordinary vote.
  • (a) 2/3 vote of board for up to 10% increase over rolled back rate;
  • (b) unanimous vote of board for increase in excess of 10%, unless board exceeds 9 members, in which case required vote is 3/4

Comments

  • School taxes will not be capped.
  • Fees, assessments and other revenue sources are not capped.

Increased Millage Rates to Offset Constitutional Tax Base Reductions

  • If the constitutional amendment passes, cities, counties and special districts in FY 2008-09 can override caps in order to make up the loss in tax base from the homestead exemption and other exemptions/reductions.
  • Local governments can override the cap by extraordinary vote.
    • (a) by a 2/3 vote, the rate can be increased to restore 67% of the difference between the rate that would apply absent the base reduction and the true rolled-back rate; and
    • (b) by a unanimous vote, or 3/4 vote for board with 9 members or more, any rate can be imposed.

Comments

  • Substantial tax base reductions—particularly from the new super homestead exemption—will put pressure on local governments to utilize these override mechanisms to raise millage rates to make up for taxes lost to base reductions.

Constitutional Relief

  • Place on ballot for January 29, 2008 presidential preference primary election

Comments

  • If approved by the voters in January 2008, the constitutional relief would be applicable retroactively to January 1, 2008.Constitutional changes must be approved by at least 60% of the voters, and some have suggested that elimination of SOH triggers 66% vote.

Super Homestead Exemption

  • Homeowners can opt out of current Save Our Homes cap and $25,000 homestead exemption and opt into a new, 2-tiered “super homestead exemption.” Tier 1 will exempt 75% of first $200,000, with a minimum exemption of $50,000. Tier 2 will exempt 15% of next $300,000. Opt-out of Save Our Homes is irrevocable. 1st-time home buyers and those who move will not have option for SOH cap.

Comments

  • Applies to all tax bases including schools, but legislature stated intent to hold schools harmless from cuts. However, public promises by House leadership not to increase required local efforts rates suggests the Legislature will need to look elsewhere for the up to $1.5 to $2 billion per year in school property tax reductions anticipated as a result of reductions to the base.
  • Unknown. No revenue impact analysis done on amendment giving homeowners option.

Future Homestead Increases

  • Constitutional amendment annually increases $500,000 maximum value against which 15% exemption is applied by growth in personal income. Also authorizes Legislature, by 2/3 vote, to increase the homestead exemption.

Comments

  • Super homestead exemption is repealed if constitution amended to provide for assessing homestead property at less than just value.

Minimum Homestead Exemptions

  • Constitutional amendment guarantees a minimum homestead exemption of $50,000, ($100,000 to low income seniors).

Comments

  • Low income seniors exemption applies to those 65 and older whose household income is $20,000 or less.

More details coming on the following items:

  • Non-Homestead Residential Property Exemption
  • Commercial Property Exemption
  • Tangible Personal Property Exemption
  • Working Waterfronts
  • Affordable Housing
  • Valuation—Highest and Best Use
  • Valuation—Deed Restrictions

 

Florida Property Tax Reform Could Go To a Vote Today

Thursday, June 14th, 2007

The Florida Legislature could vote as early as today on its property tax reform plan. The Florida Association of Realtors® (FAR) issued a Call-to-Action earlier today, asking Realtors to tell their lawmakers that the proposal does not go far enough.

Key Florida property tax issues cited by FAR include:

Inadequate relief for non-homestead and commercial properties. Commercial property owners have suffered annual tax increases of 20, 30 and up to 50 percent over the past five years, and FAR supports a greater property tax cut than the 9 percent currently proposed.

The “Super Homestead” exemption. Realtors support this proposed amendment to the Florida Constitution, especially in that the exemption increases along with any increase in inflation, and can be increased by a two-thirds vote of the Legislature if the constitutional amendment passes.

Save Our Homes. Realtors support phasing out this amendment in the Florida Constitution. The Legislature needs to address the pent-up and growing demand of residents who either need to move but can’t, or want to move but know it’s not in their best interest to do so.

“Present use” and not “highest and best use.” Commercial property needs to pay a property tax based on its present use. “Highest and best use” standards have led to abuse throughout the state, according to FAR, causing commercial and business property owners to pay unwarranted high taxes. If not included in the current reform package, FAR will continue to address the issue in future legislative sessions.

Jan. 29, 2008, election. Realtors support putting constitutional tax reform for Florida on the Jan. 29, 2008, presidential preference primary ballot.

Investing in Real Estate with an IRA

Tuesday, June 12th, 2007

What to know about using IRA money for real estate investing

NEW YORK – June 11, 2007 – Self-directed IRAs give investors lots more options than do traditional company-sponsored retirement plans, including the option of investing in real estate.

For many people, real estate is the alternative investment of choice, according to Tom Anderson, president of PENSCO Trust, a custodial firm specializing in self-directed IRAs.

“The slowdown in the real estate market really hasn’t affected our business because we’re talking about investment properties versus personal residences, and people are taking advantage of down market opportunities,” he says.

The rules and regulations for investing an IRA in real estate are complex, and failure to pay attention will result in substantial taxes and penalties, experts say.

Accountant Ed Slott, founder of the IRAhelp.com Web site, offers these suggestions:

• Set up a separate IRA for real estate investments. Even if only a small portion of the IRA is used for real estate, the IRS could penalize the entire balance in a prohibited transaction.

• Check the investment scenario with custodians and other professionals who have experience in these transactions and can spot red flags.

• If possible, choose to invest in a Roth IRA. The money in the Roth has already been taxed and any distributions, including capital gains on the property, are generally tax-free.

Source: MarketWatch, Marla Brill, (06/06/07)

© Copyright 2007 INFORMATION, INC. Bethesda, MD (301) 215-4688

Has Florida Legislature Reached an Agreement on Florida Property Tax Reform?

Tuesday, June 12th, 2007

TALLAHASSEE, Fla. – June 11, 2007 – We have a deal. Senate President Ken Pruitt (R-Port St. Lucie) and House Speaker Marco Rubio (R-Miami) announced that they’ve reached an agreement to cut property taxes in Florida.

The property tax reform is a complicated, two-step formula that would offer moderate relief this year and greater relief next year. Homesteaded owners win most, but commercial interests also benefit. Details will be discussed starting tomorrow, the first day of the Florida Legislature’s special session, with a vote possible before the scheduled end on June 22.

Step 1

The two steps operate independently and cut taxes in different ways. Step one can be accomplished immediately if approved by the Legislature and signed by Florida Governor Charlie Crist. Under this step, all cities and counties will be required to cut taxes in the upcoming 2007-2008 fiscal year to the 2006-2007 revenue levels. After determining that level, each local government will then be required to make an additional cut of 3 percent, 5 percent, 7 percent or 9 percent.

The specific amount each local government must cut depends on a formula. Rubio and Pruitt say they’ll calculate property taxes over five years and use a statewide average of increases as a baseline. They will then compare each local property tax increase to that baseline number. Local governments on the high side must institute an additional 7 to 9 percent decrease; those on the low side must cut by 3 to 5 percent. Special taxing districts and fiscally limited cities and counties will be required to cut taxes to the 2006-2007 revenue levels and make an additional cut of 3 percent.

Finally, local governments may increase tax revenues over time but only by an amount based on local increases in personal income and new construction.

However, local governments would be able to override the proposed cut and caps, and the method – supermajority vote, referendum, etc. – for override approval would depend on the magnitude of the change.

Step 2

To amend the Constitution, voters will be asked to replace “Save Our Homes” and the $25,000 homestead exemption with a new “super exemption.” This would give most homeowners increased savings, and also open the market to anyone seeking homestead property, including new residents and first-time buyers who now start from scratch and pay property taxes on the full value of the property their first year. Passage would require approval from 60 percent of voters.

The exemption has two tiers:

Tier 1: Homestead property will receive an exemption of 75 percent of the first $200,000 in value of the home; or, put another way, a taxable value of $50,000. The minimum exemption is $50,000 per homestead.

Tier 2: In addition to Tier 1, homestead property will obtain another 15 percent exemption for the next $300,000 in value. A $350,000 property, for example, would have a taxable value of $177,500 – $50,000 on the first $200,000, and $127,000 on the additional $150,000.

If a homeowner would benefit more from the existing Save Our Homes exemption – generally long-term owners – he will be able allowed to retain that benefit until he sells the home. Legislators have also agreed to address issues such as relief for low-income elderly taxpayers, incentives for affordable housing and tax reform for “working waterfronts” and small businesses. Other details need to be worked out.

Florida House and Senate agree on Florida Property Tax Relief

Monday, June 4th, 2007

House and Senate leaders agreed Friday on a basic outline for a property tax relief solution and restructuring the Legislature will take up at a special session June 12-22.

House Speaker Marco Rubio, R-West Miami, and Senate President Ken Pruitt, R-Port St. Lucie, disclosed the results of behind-the-scenes negotiations in a letter to their colleagues.

They have agreed to take a two-step approach: immediate statutory tax cuts the Legislature can enact on its own and long-range reductions that will require voter approval through passage of one or more amendments to the Florida Constitution.

Read the full article here:

http://www.floridarealtors.org/NewsAndEvents/n1-060407.cfm 

The preceding text was quoted from the above linked article.

The Worst of the Florida and national housing slowdown is over

Friday, June 1st, 2007

The worst of the housing slowdown is over, but the nation’s economy still faces challenges including rising unemployment and uncertainty over gas prices, University of Central Florida economics professor Sean Snaith said today.

Snaith, director of UCF’s Institute of Economic Competitiveness, said in his second quarter U.S. forecast that housing starts will decline in the third quarter and then begin a “slow upward climb through 2009.”

The above was quoted from the following URL.  The entire article can be read here:

http://www.orlandosentinel.com/news/local/state/orl-biznews-econ053107,0,4565879.story?track=rss

Florida Real Estate Bubble – Is the worst already behind us?

Friday, June 1st, 2007

A top Florida economist, Hank Fishkind, says that the worst of the Florida real estate slump is probably behind us already. “It will take another 18 months or so before closing volumes reach more normal levels, but the worst is behind us,” says Hank Fishkind.

Is the worst of the Florida real estate bubble burst over?

Read entire article:

http://www.floridarealtors.org/NewsAndEvents/n2-053107.cfm