Are Florida Real Estate Property Taxes On The Way Out?

Are potentially eliminating or, in the alternative, drastically slashing Florida real estate property taxes beneficial to homeowners, home buyers, renters, and/or commercial real estate owners?  It really depends upon who you ask and how you analyze the potential ramifications should such legislation pass the Florida House, Senate, and us, the voters.  There are different proposals being discussed regarding the real estate taxes of owners of homestead property—meaning Florida homeowners whose home is their primary residence.

The following is a series of Q’s and A’s as to the potential of this legislation, if passed:

1. How do property taxes relate to home prices?
   Evidence shows that the future expenses of home ownership, which include property taxes, are part of the home’s current value.  Should property taxes be eliminated or reduced substantially, the value of residential real estate will increase.  According to Realtor.com®, property values would immediately jump by about 7% to 9%.

2. Should Florida real estate property taxes be eliminated or drastically reduced, how will that affect the Florida residential real estate market?
   If the value of Florida residential real estate increases due to the elimination or reduction of property taxes, affordability issues for first time home buyers may be an even bigger concern.  Why?  Increased home values translates to increased home prices.

3. If the focus currently is to eliminate or reduce real estate property taxes for residential real estate in Florida, how may this affect commercial properties or rental properties in Florida?
   Should the proposals pass, time will tell what the actual results of the legislation will be.  However, there is some concern that commercial property owners  and renters may be charged with new fees imposed by local governments in order to make up for the tax loss.

4. What has traditionally real estate property taxes paid?
   Real Estate Property taxes are in essence fees for services such as schools, police, fire, water and sewer, and other services.  According to an analysis by the Florida Policy Institute, real property taxes for all real estate accounts for 18% of county revenue, 17 % of municipal revenue, and 50-60% of school district revenue.  Critics of the elimination or severe reduction of real estate property taxes are concerned that these services may become underfunded, affecting the overall quality of life in Florida.

5. If this Florida real estate property tax legislation passes, how will the services that the current property tax be funded?
   While it is too premature to know what is next since, again, the legislation must pass both the Florida House and Senate and be voted by us voters, one may speculate the state sales tax, corporate income taxes, and taxes on non-homestead properties such as second homes and rentals will rise to meet the needs of any shortfall the passage of this legislation would create.

What does this all mean?
The impact of the approval of changing our current real estate property tax structure may help those homeowners who face increased costs related to their homes.  The challenge to home ownership in general typically has been affordability.  Yet, if revenue is needed to provide critical infrastructure and social services, other taxes will need to be imposed.  We will wait and see what happens next.

For thirty plus years, Oppenheim Law has served local, national, and international clientele particularly in the areas of real estate and business law. Our sister company, Weston Title & Escrow, Inc., has provided title insurance and title-related services for three decades. Should you have any questions related to a real estate or business matter, feel free to call us at 954-384-6114 or contact our firm directly at contactus@oppenheimlaw.com, and should you need assistance with a commercial or residential real estate closing, please call us at 954-384-6168 or by e-mail at contactus@westontitle.com.