Property Taxes and Oversized House
Lisa and Jaime, ages 57 and 59 live in a four bedroom, 3000 square foot Fort Lauderdale, Florida home. They've priced smaller homes and estimate that a townhouse with three bedrooms would provide ample room for the family. They've discussed about moving to a smaller home, but are staying put for now because the move would cost them $9,000 in taxes an increase of $2,500.
Like other families who purchased houses before the real estate boom, they are now stuck in oversized houses because they can't afford the additional sizable hit on their property taxes which would be imposed if they were to purchase a new house.
This situation developed due to the state's Save Our Homes amendment which holds increases to no more than 3% annually regardless of actual increases in value. For people like Lisa and Jaime who purchased their house in 1999, pre-housing market explosion, the cap on property tax increases was a way to dodge the high property taxes which are putting newer and smaller houses out of the reach of the average home buyer.
Now, the long time homeowners are also finding a problem with the tax cap. They can't afford to downsize, because the added property tax prices on a new home purchase would eat up any savings they might make in mortgage payments.
Florida is facing a problem which is similar to that of California in the 1970's. A wave of new residence and little management of growth have caused skyrocketing real estate values and property taxes. Homeowners in South Florida who haven't earned the state property tax cap have seen more than 100 percent tax increases over the past few years.
Although Floridians don't pay state income tax, they do pay burdensome hurricane insurance premiums which are in many cases higher than what state income tax would cost. In addition, salaries and wages are generally lower than those of California and Florida, the states with whom Florida is most often compared.
A special property tax session at the legislature is currently reviewing three plans. The House wants $85 billion in cuts, the Senate is requesting $15 billion and new Republican governor, Charlie Crist has a plan offering about $34 billion in tax cuts. Crist also wants substantial increases in the homesteaders exemption which is currently $25,000.
Revenues which have been lavish to local governments, thanks to the ballooning property tax collections would face a rollback to 2006 figures with potential for added cuts up to 9%. Needless to say, mayors and county officials are less than thrilled about that concept. State legislators state that it is time to bring local government spending back to reality.
The state property tax plan will need to allow for education funding, since local taxes currently pay most of the cost of education in Florida.
At present, legislators appear more likely to go with Crist's approach of a $31.6 billion cutback apportioned over five years. This cutback will probably require elimination of the property tax caps. The final plan will probably require a voter referendum in the state's presidential primary to be held in January 2008.
Gus Taperman holds a Bachelor's degree in Commerce and completed his master's in Business Administration. He is working as writer and financial consultant http://www.taperman.com
Article Source: http://EzineArticles.com/?expert=Gusi_Taperman
Saturday, July 7, 2007
Miami Dade and Broward Landlords Left Out
Landlords in Miami-Dade who own hundreds of rental properties are losing lifeblood to the point where many will need to sell or be prepared for a two to five year wait while the market comes back to full strength. Under either option, there is no doubt that the real estate market in Miami-Dade and many other Southeast Florida counties will be hurting.
The National Association of Realtors present a different picture. They feel that it's only a matter of a few months before the market turns around. Miami-Dade rental property owners believe that the prospects for a significant turnaround are much further in the future since many of them will be bailing out on their losing holdings and selling them off at whatever price they can get. This will ultimately increase inventory which is already dangerously high and lower the prices as these properties come on the market.
One positive impact which the new legislation will have on the market for real estate is to the buyers who are just moving to Florida. The falling house prices will encourage these non-homesteaded buyers to purchase. The new legislation will save those current buyers about $2,000 on a $300,000 homes. They would be paying $2500 instead of $5500 in tax bills. And, once they purchase, the property will increase in value, presumably with a corresponding increase in the tax bills in future years.
Some real estate agents feel that the legislature should have rolled back tax rates to 2002 or 2003--before the real estate bubble happened. Another sore point is the revenues collected by local governments during the last five years. They are perceived as simply benefiting unfairly by keeping monies that rolled in during the boom. At present, the local governments appear to be the only ones happy about the tax revenues collected.
Lobbyists with the National Association of Realtors working with Florida legislators agrees that the new legislation did not go nearly far enough to solve the needs or the real estate slump currently going on. But, they say they felt that had pushed the issue as far as possible for this session and view the legislations as only a starting point. The lobby for the National Association of Realtors plans to continue working for further rollbacks.
The question of whether there will be enough landlords of rental properties in the Florida markets willing or able to hold onto properties which are essentially a cash drain every month. The rapidly escalating housing market value, including those of rental housing have corresponded with rapidly increasing tax bills. In the meantime, the average rental prices while also increasing have not kept pace with the tax bills.
The annual property tax rates in many areas have more than doubled during the last three to five years. Landlords are simply unable to charge enough to pay for taxes, insurance and in most cases debt service, leaving them with the choice of dumping the properties at bargain basement properties or accepting a negative cash flow position at present with the hope that things will improve in the near future.
Gus Taperman holds a Bachelor's degree in Commerce and completed his master's in Business Administration. He is working as writer and financial consultant http://www.taperman.com
Article Source: http://EzineArticles.com/?expert=Gusi_Taperman
Landlords in Miami-Dade who own hundreds of rental properties are losing lifeblood to the point where many will need to sell or be prepared for a two to five year wait while the market comes back to full strength. Under either option, there is no doubt that the real estate market in Miami-Dade and many other Southeast Florida counties will be hurting.
The National Association of Realtors present a different picture. They feel that it's only a matter of a few months before the market turns around. Miami-Dade rental property owners believe that the prospects for a significant turnaround are much further in the future since many of them will be bailing out on their losing holdings and selling them off at whatever price they can get. This will ultimately increase inventory which is already dangerously high and lower the prices as these properties come on the market.
One positive impact which the new legislation will have on the market for real estate is to the buyers who are just moving to Florida. The falling house prices will encourage these non-homesteaded buyers to purchase. The new legislation will save those current buyers about $2,000 on a $300,000 homes. They would be paying $2500 instead of $5500 in tax bills. And, once they purchase, the property will increase in value, presumably with a corresponding increase in the tax bills in future years.
Some real estate agents feel that the legislature should have rolled back tax rates to 2002 or 2003--before the real estate bubble happened. Another sore point is the revenues collected by local governments during the last five years. They are perceived as simply benefiting unfairly by keeping monies that rolled in during the boom. At present, the local governments appear to be the only ones happy about the tax revenues collected.
Lobbyists with the National Association of Realtors working with Florida legislators agrees that the new legislation did not go nearly far enough to solve the needs or the real estate slump currently going on. But, they say they felt that had pushed the issue as far as possible for this session and view the legislations as only a starting point. The lobby for the National Association of Realtors plans to continue working for further rollbacks.
The question of whether there will be enough landlords of rental properties in the Florida markets willing or able to hold onto properties which are essentially a cash drain every month. The rapidly escalating housing market value, including those of rental housing have corresponded with rapidly increasing tax bills. In the meantime, the average rental prices while also increasing have not kept pace with the tax bills.
The annual property tax rates in many areas have more than doubled during the last three to five years. Landlords are simply unable to charge enough to pay for taxes, insurance and in most cases debt service, leaving them with the choice of dumping the properties at bargain basement properties or accepting a negative cash flow position at present with the hope that things will improve in the near future.
Gus Taperman holds a Bachelor's degree in Commerce and completed his master's in Business Administration. He is working as writer and financial consultant http://www.taperman.com
Article Source: http://EzineArticles.com/?expert=Gusi_Taperman
Subscribe to:
Comments (Atom)