Recapture Rule Astounding Florida Taxpayers
Posted by Benjamin Dona on Tuesday, September 23rd, 2008 at 11:05pm.
Imagine the surprise of over a million Florida residents who received their proposed 2008 real estate tax assessments expecting to see a tax decrease (based on the passage of the Amendment I) and finding out their taxable value has actually may have gone up by 3%. How is this possible you say, especially considering almost everyone's market value has dropped in the last two years? Welcome to the world of the state's "down-means-up recapture rule."
The rule was adopted way back in 1995 by the state's Department of Revenue with the full backing of then Governor Lawton Chiles. In fact, they even went to court when a group of county property appraisers challenged the rule prior to its being passed by the Florida Cabinet. Unfortunately, the administrative law judge hearing the case approved the rule calling it "an appropriate way" to apply the Save our Homes Amendment when property values go down (try and figure this one out).
The recapture rule came about from a quirk in the original Save Our Homes Amendment. While the amendment limits the annual assessment increases for homesteaded primary residences to no more than the annual increase in the Consumer Price Index or 3%, whichever is less, it failed to address what happens when market values go down. Governor Chiles and the Florida Cabinet stepped in to adopt the recapture rule to cover that situation. It requires the annual assessment to increase no matter if a home's market value goes up, down or stays the same. The only limit is that an assessment cannot exceed a home's market value. Up until last year, the rule had little to no effect as property values were continually rising to some degree, year over year. But now that the real estate market has gone into decline, thousands of Florida homeowners are feeling its bite. And, it looks like it may take another constitutional amendment in order to overturn the current rule.
As we all know well, that can't happen overnight. Evidently, it also looks like a couple of our lawmakers are going to try and introduce legislation to repeal the rule during the next regular session. However, that won't help with this year's tax bills. When you combine this fiasco with the Florida Supreme Court recently shooting down the second round (Amendment V) of real estate tax reform, it doesn't take a rocket scientist to figure out that there will be no substantial tax relief for the residents of Florida anytime soon.
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About the Author
Benjamin Dona is the Broker and Owner of Gulf Coast Associates, Realtors in Bonita Springs, Florida. He holds two advanced degrees, an MBA and an MA, and has an extensive background in both business and marketing. In 1998, he founded Gulf Coast Associates, and formed a group of like-minded Realtor® associates dedicated to offering professional Southwest Florida real estate services by concentrating on information, education and the use of leading edge technologies. He also is a recognized expert on the "Net," a much-quoted and read blog author, and a contributor to both national and international news outlets. Benjamin is a member of the National Association of Realtors, the Florida Association of Realtors, and numerous local real estate boards throughout Southwest Florida.
Contact Benjamin Dona at 239-948-3955
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