The Killer Real Estate Tax Pill

Property taxes provide the bulk of local government revenues in Florida. They account for a large portion of the revenue needed to provide fire protection, education, law enforcement and other services. Unfortunately, this tax system does not make sense in times of economic difficulty and the rapid erosion of real estate values.

While the owners of Florida real estate are looking to lower their property tax burdens, cut monthly expenses and increase cash flow, the state and local governments are facing huge budget deficits and are resistant to simultaneously significantly lower tax assessments. Of course, this could not be happening fast enough for all of us.

Why should an investor who is willing to risk a sizable amount of cash in a bank owned condo in Miami, for example, have to pay taxes based on unjustified taxable values? It is time to change our outdated and unrealistic Florida laws and statutes that govern property tax assessments.

In the event that you are wondering what rights you have to dispute your tax bill, you need to know the basic facts and steps involved in this process:

The Basics – Property taxes are levied on an annual basis. Taxes are paid in arrears, at the end of each tax year, for the period January 1 through December 31. Property taxes become a lien on all real estate in Florida on January 1st each year. Taxes are payable to the county tax collector on or after November 1st each year. You may make your payments in four installments or in one lump sum. Property taxes for the previous year become delinquent on April 1st.

Protesting Your Property Assessment – You are entitled to protest your property assessment and Florida has a three-step process:

• Step One. You have only 25 days to protest your assessment from the date that it is mailed. If your arguments are valid, the county property appraiser is authorized to make a change. If your request is rejected, move on to step two.
• Step Two. File an appeal with the Value Adjustment Board. This five member board is made up of five members, three county commissioners and two county school board members. If you are denied again, call your lawyer and proceed to step three.
• Step Three. The final step available to you is litigation in the courts.You may pay the taxes under “protest” and file a suit against the county property appraiser and county tax collector.

Nonpayment of Real Property Taxes - Property taxes constitute a lien superior to all other liens on real property. Special assessments are next in order of priority. Unlike other liens and debts, property taxes and special assessments become liens as soon as the assessment is complete. Unpaid property taxes are considered a debt and the property is considered security for the debt and may eventually be sold to repay the obligation.

Property Tax Certificates - A property tax certificate in the amount of taxes owed is issued to repay for each delinquent property. The holder of a property tax certificate may force a public auction of the property after TWO years by requesting a tax deed.

If you need any additional information, or would like to discuss a specific real estate issue, please contact us at info@miamiangelproperties.com.

To Homestead Or Not To Homestead?

Many Floridians are unaware of a state rule passed in 1995, which requires assessed property values to grow by 3 percent or by the Consumer Price Index, whichever is less, as long as the property’s market value does not dip below the assessed value. Therefore, even homeowners whose market value dipped this past year may see lower savings or even a slight increase in their taxes.

I think that this law needs to be immediately eliminated or amended. Why? This law works against many that are homesteaded versus those homeowners that are not. According to Kurt Wenner, director of tax research for Florida TaxWatch, “this could be the first year where people under Save Our Homes taxes go up, and people with non-homestead properties go down.”

Last year, voters overwhelmingly approved Amendment 1, which effectively doubled the homestead exemption for primary homeowners to $50,000 and made the Save Our Homes tax protection more portable. This amendment also placed a 10 percent cap on non-homesteaded properties.

So Florida snowbirds, second or investment property owners, who have been left out in the cold for so long on property taxes, may find that their property tax bills falling this year, together with real estate market values.

If you would like to consult with us on your tax situation or value of your property, please contact Ross at info@miamiangelproperties.com or call 305.673.5300.

Property Taxes Front Lines

A few weeks ago, I published a blog on Florida’s property tax issues titled Florida’s Property Tax Conundrum. In addition to the ever rising cost of property insurance in our state, the real estate tax debate is now on the front lines. Currently faced with severe budget cuts, the Florida Legislature, Department of Revenue, local cities and counties, are in no rush to change the way they assess real estate property taxes.

However, there is some light at the end of the tunnel. The Florida Department of Revenue (“DOR”) recently issued an advisory opinion that foreclosures in general should not be used for assessment purposes, but that Property Appraisers may “calibrate” property assessments to “adjust” for foreclosures. The term “calibrate”, which does not exist in the DOR  rules and Florida assessment statutes, means that Property Appraisers may potentially qualify foreclosure sales that were sold on the open market, or more specifically, those that were listed on the MLS. Additionally, based on the October opinion issued by the DOR, short sales are now believed to reflect the market and may also be used for 2009 assessment purposes.

Property assessments in Florida are always done a year in arrears, therefore, this is good news for 2009 assessments.

Lori Parrish, Broward County’s Property Appraiser, is being very open about her interpretation of the DOR’s latest opinions and has publicly issued her 2008 assessments guidance on short sales and foreclosures. Let’s just hope that our new Miami Property Appraiser, Pedro Garcia, will answer to the voters who put him in the position. In a recent interview with the Daily Business Review, Garcia stated that his “primary goal” is to “establish the right value for all properties in Miami-Dade County.” Additionally, he stated that the “department will take a look at comparable sales, foreclosures and short sales in a community to establish the right value of properties in each market area.”

Let’s make sure that we hold him to this.

If you would like a FREE consultation on the value of your property or to discuss your real estate tax situation, please feel free to send us a request at info@miamiangelproperties.com or call Ross at (305) 673-5300.

Florida’s Property Tax Conundrum

Working with buyers of Miami residential real estate can be a lot of fun and full of adventure. We have so many unique neighborhoods, eclectic architectural styles, and such a diverse culture, including homes from tropical bohemian bungalows in Coconut Grove to high-tech modern waterfront homes on the Venetian Isles. Eventually, however, you have to cross that shaky old “real estate tax” bridge. PROPERTY TAXES ARE WAY TOO HIGH, and are a major factor in the property buying decision process.

YES, prices have come down considerably, and in some cases way below the threshold that any of us in this business imagined. Fantastic, that $2.1 million home in the Grove is now available at $850,000!

YES, unless you are in the $5 million and up range, there is a huge inventory of properties to choose from across the board. Superb, short sales and foreclosures galore!

YES, with only a minimum required down payment of 3%, attractive FHA financing is available. Wooohoo, my bank offered me is an amazing rate of 5.5% on 30YR fixed rate mortgage!!

SAY WHAT? Although my purchase price is $129,900 and I am purchasing a wonderful foreclosure property at 40 cents on the dollar, the property appraiser is not going to adjust my market value down to the purchase price in 2009!

According to the Miami Dade Property Appraiser, the current market value of this home is $322,205, and the 2007 real estate taxes were $8,113. This means that I am required to pay as much in real estate taxes as in principal and interest. Does that sound reasonable and workable to ANYONE?

There is some silver lining in this box. Several proposals are out there to drastically reduce the cost of real estate taxes in Florida. People we need to get with the program and talk to our Florida legislators. Check out one proposal out there called Cut Property Taxes Now, for example. They propose capping property taxes to a maximum of 1.35% of market value.

No matter which direction you think best, let your voice be heard and let’s push for CHANGE!

If you would like a FREE consultation on the value of your property or to discuss your real estate tax situation, please feel free to send us a request at info@miamiangelproperties.com or call Ross at (305) 673-5300.