When is a tax cut not a tax cut?
I've never been a property owner, so property taxes are this wide open space about which I know less than nothing. Here in Florida, though, they're the backbone of the tax revenue system, since we have no state income tax. We hit the locals and the tourists with sales tax, and the property owners with property tax. During the recent housing boom, property tax owners took it right between the eyes--values went up, as did assessments, and taxes along with them. The result was that both the state and local governments were swimming in money for a while. It was such an issue that during the last governor's race, the question wasn't whether or not there would be a property tax cut, but what kind and how large of a cut there would be.
Via the Florida Progressive Coalition blog, here's a primer on how the current tax cuts might not save you any money, even if the value of your house has dropped.
How a home can have an assessment increase when it goes down in value.And the issue is far from settled. The Mayor of Weston is suing to keep the tax cuts from going to the ballot in January, saying "that a proposed state constitutional amendment is flawed because it contains a "misleading" ballot summary and improperly scheduled election date and interferes with local governments' authority to levy property taxes." So who knows where this will end up?
Property A's market value increases by 10 percent. Save Our Homes limits the assessment increase to 3 percent. Now the home's assessment is 7 percent under market value.
The next year, Property A's market value falls. But since its assessed value remains under market value, the property appraiser must increase it up to the Save Our Homes cap.
And we're just starting to wade into this morass because the bursting of the housing bubble means home prices are creeping down into our range. I need to do some studying.