Orange County property valuator Bill Donegan said Florida Governor Charlie Crist’s property tax proposal would transfer the tax burden from first-time homebuyers to existing-home owners. Previously, Crist released his property tax proposal which was aimed at energizing the state’s housing market downed by Florida foreclosures. The tax proposal would lighten the tax bill of first-time homebuyers to attract more new homebuyers.
Donegan however said Crist’s tax proposal would be unfair to existing-home owners since first-time homebuyers would pay tax on only 50 percent of the property value initially while existing-home owners that sell their homes and buy another unit would benefit only from the Save Our Homes tax exemption. The exemption limits yearly increases in residential property valuation to 3 percent.
Crist’s tax proposal is being criticized despite its noble aim of solving problems caused by Florida foreclosures because of the much bigger tax savings given to first-time homebuyers. Crist’s plan however limits the tax exemption given to first-time homebuyers to $250,000 in residential property valuation. This tax exemption would also be invalidated over five years of property ownership. By then, most of the problems caused by Florida foreclosures would have been solved.
Donegan further claims that there are second-time homebuyers who would pay tax about $4,500 more than first-time homebuyers buying homes of the same value. This happens, according to Donegan, because some would no longer gain from the Save Our Homes tax exemption because of the drastic drop in home prices following the flood of Florida foreclosures.
Republican Representative Carl Domino responded to Donegan’s claims by saying that property taxes have never been fair. But ultimately, Domino says, the unfair tax breaks given initially to first-time homebuyers will benefit existing-home owners by way of increased home prices. Crist’s tax proposal was aimed at stabilizing the housing market by solving Florida foreclosures.
Domino said there are about 300,000 excess homes for sale, most of which are from Florida foreclosures. And these units which are lowering home prices must be sold to balance supply and demand.
Republican Senator Evelyn Lynn also supported Crist’s bill by sponsoring the bill in the Senate. She said the issue of tax equity will be discussed during the legislation process. If the tax break is approved by state lawmakers, voters in 2010 will have to approve the legislation as an amendment to the Florida Constitution.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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