Tax Break for Commercial Property Owners on the Horizon
Much has been published over the past year of the Florida legislatures attempts to help homeowners lower their taxes to reduce costs. However, little concern has been shown to non-homesteaded or commercial properties during this time period. I just received an update from the Florida Association of Realtors who is lobbying to help commercial owners reduce their costs as well. Here is a recent update of what has been happening:
This week the Florida Tax and Budget Reform Commission (TRBC) passed CP 002. What does it do? Here’s a summary: 1. Starting in 2009, limit assessment increases to 5% a year on all non-homestead property. This is down from the 10% included as part of Amendment 1 passed in January, and keeps it permanent (Amendment 1st cap lasted only for 10 years.)
2. It requires the Florida Legislature in 2010 to abolish the states required local effort for schools. It will be somewhere between $9-11 billion dollars, and that money can be made up in any combination of 4 ways.
a. An increase of up to one percentage point to the sales tax (The Florida statewide sales tax is currently 6%)
b. Spending reductions for other components of the state budget and revenue increases resulting from economic growth attributable to lower property taxes
c. The repeal of sales tax exemptions, but not including food, health services, prescription drugs, the sale of real property, and items for resale
d. Other revenues identified or created by the Legislature.
3. This will result in lower property taxes between 25-50%, depending on where you live in Florida. More simply, it does away with the School Board portion of your property taxes, though local school boards will retain a very small amount of discretionary taxing authority.
The important part for Commercial property owners is the 5% cap on non-homestead properties. If you own a property that has been receiving large increases each year, that will be no longer the case as the limit will be 5% each year. This is a welcome relief to owners here in Florida who have been hit hard over the past 5 years with tax hikes.
But this amendment is not passed yet…It needs 60% approval by the voters in November to be passed into law so if you live in Florida now’s the time to do your part and help save yourself some money. In this down market all of us need all the good news we can get, and this time we can affect our own pockets for a change.
Peter J. Barnett, CCIM
April 25th, 2008 at 2:52 pm
Florida should consult California’s property tax law which limits annual increases. While Ca. has a 9% income tax, the tax is on disposable and non-appreciating items and is a one time tax. Proprty appreciates (over time) and is taxed every year which makes it very expensive for those on a fixed income.
May 1st, 2008 at 3:19 pm
Florida has so many different ballots and proposals that it makes choosing the best one confusing to the taxpayers. Certain legislators make it seem like all our schools would implode if we used sales tax for revenue instead of property tax.