A South Florida Sun-Sentinel analysis showed that 63 percent of those who own a primary residence in Palm Beach County would benefit, which is more than the 52 percent legislative analysts had predicted. However, the average savings is far less — $1,212 — than the Legislature estimated, the Sun-Sentinel found. State analysts said the average savings would top $2,000 in the first year.
Among the potential beneficiaries of the new, bulked-up homestead exemption, about one in three — 76,891 homeowners — would pocket less than $500 in savings the first year, the Sun-Sentinel analysis of tax data showed.
Even homeowners who benefit should be wary about embracing the new exemption, experts say, because there would be no cap to protect them from dramatic jumps in real estate taxes such as with Save Our Homes.
"The taxes are going to go up over the long run," said Chris Bender of Wellington, an engineer who would save $1,267 on his initial tax bill on his $463,000 home in the Village Walk development. But he said he prefers Save Our Homes because of the 3 percent cap on yearly tax value increases.
"Sure, I stand to save money, but in the long run, I pay more and it's bad for the economy. I don't know how it got through."
The "super exemption" is the centerpiece of a package Gov. Charlie Crist and the Legislature tout as the largest tax cut in Florida's history.
If the amendment passes in a Jan. 29 statewide vote, current homeowners could choose to keep their Save Our Homes tax break or opt for the new homestead exemption.
As a rule, new buyers and owners of moderately priced homes would save under the new exemption, but high-end homeowners and longtime homesteaders are better off under the current system.
The Sun-Sentinel analyzed tax data on 351,317 homesteaded property owners in Palm Beach County to find out who would benefit and who would not. About 220,000 save between pennies and $4,196 on their tax bills, while the remaining 131,000 are better off under Save Our Homes.
More than 5,000 low-income seniors and owners of inexpensive homes would have their property tax bills reduced to zero.
With the new exemption, the average bill among beneficiaries would drop to $2,718 — a 31 percent savings.
But Property Appraiser Gary Nikolits said people should be skeptical of switching. Most people who plan to stay in their home for more than a few years are better off with Save Our Homes, he said.
"It's the same as an adjustable-rate mortgage," said Nikolits, noting that despite the current real estate funk, homes usually grow in value at about 7 percent or 10 percent a year. "There's a lot of benefit up front, but as it continues to adjust, those benefits evaporate quickly and you end up paying a whole lot more than you would under the current system."
In middle- and low-income communities, the "super exemption" would produce big benefits, at least temporarily. In the Bexley Park affordable-housing development in Delray Beach, where homes are worth an average $270,000, all 208 homesteaders would see savings. The average discount: $1,773.
Mitchell Katz, 36, bought his home in Bexley Park for $225,000 in 2005. He'd save more than $1,500 in the first year with the new exemption, but he plugged his values in a tax calculator and found out he'd pay more over time." Tough to turn $1,500 down, but I don't think it's a very wise move over the long term," said Katz, a university administrator. "I'm looking at staying in my house for a long time. Being short sighted, when everything's tight, it's easy to say yes, do it. But looking long term, I'm probably leaning toward voting against it."
The new system favors lower-priced property with its three tiers for setting taxable value. A $200,000 home would be taxed at just $50,000 in value, while a $1 million house would be taxed on $805,000 in value. Thus, vast numbers of owners in developments such as Boca Raton's Royal Palm Yacht & Country Club, where homes run more than $2 million, are better off under the current system.
Frank Fahy, 71, is an example. He pays about $5,100 in taxes on his $527,000 oceanfront condo in Juno Beach, where he's lived since 1993. Under the "super exemption," his taxes would jump to more than $7,000. He's voting against the amendment and is frustrated the Legislature didn't make his Save Our Homes tax break portable.
"I think there's gotta be a better equilibrium," he said. "The real estate market, too, is being killed, absolutely killed. A lot of people who are looking to move, we're locked in. Anyplace I would go to get something comparable, I'd have to pay $15,000, $16,000 in taxes."
Statewide, legislative analysts said 73 percent of all homeowners would save with the "super exemption," with an average discount of about $1,300. But for local homeowners, especially given South Florida's sharp rise in real estate values in the last five years, savings are dictated by how much your home is worth and when you bought it.
"In this plan, the savings are significant. But there's still not enough, especially for South Florida," said state Rep. Adam Hasner, R-Boca Raton, who helped push the plan through the Legislature during a June special session. "There were better approaches for tax relief. The political realities made the current approach the only alternative."
Rep. Carl Domino, R-Jupiter, the Legislature's only Republican to vote against the "super exemption," said the new system simply doesn't work in South Florida.
"Why should the average voter give up the knowledge that under Save Our Homes, their taxes are only going to go up 3 percent a year for a sort of gamble? People will pay for certainty," he said.
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source: sun-sentinel.com
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