2011 Repeat Likely Of Adverse Save Our Homes Tax Impact
Written by Yudislaidy Fernandez on November 11, 2010
By Yudislaidy Fernandez
While Miami-Dade property owners worry about paying this year’s taxes, very soon the Property Appraiser’s Office is to start analyzing market data to set next year’s taxable values.
Although it’s too early to tell what taxable values will be next year, they’re expected to be similar to this year’s, and homestead-exempted homeowners could again feel an adverse impact from the Save our Homes program on their tax bills.
To set taxable values for 2011, Miami-Dade’s Property Appraiser’s Office is to use market data compiled from Jan. 2, 2010, to Jan. 1, 2011.
This means the taxable values set for condominiums and single-family homes are to reflect market conditions during this period, even though property owners won’t learn what they are until August when they get their truth-in-millage tax estimate notices.
Property Appraiser Pedro Garcia, who took on the role of the county’s first elected appraiser almost two years ago, said he believes the market has almost hit bottom, "so the values of those condos, single-family properties next year will be very close to what we had this year."
But the wild card is if and how much property values could rise in the county for about 251,000 homeowners with homestead exemptions whose properties still are being taxed at below market values. Tax evaluations can rise even in a down market for such residences, as they did this year.
This rate is driven by the consumer price index, which measures changes through time in the prices consumers pay for an assortment of consumer goods and services.
The Save Our Homes program caps at 3% or the annual increase in the consumer price index, whichever is less, how much exempt homesteads’ values can climb in a year.
This year, those homeowners saw their assessed values jump 2.7%, which coupled with higher tax rates set by some of the taxing authorities, meant they’d pay more tax on higher assessed values even though home values slid.
It’s too early to tell what the rate is going to be for this segment of property owners, Mr. Garcia said, as the Florida Department of Revenue won’t release the consumer price index until around May.
Miami-Dade’s 2010 taxable values, released in July, showed a sharp decline for all taxing authorities, with seven local governments posting drops of more than 20%.
Countywide, this is the most that values have fallen in 41 years, plunging 13.4% compared to last year’s 9.5% dive.
In the past 15 years, Mr. Garcia said he only recalls four times when the rate of increase for homesteaded property owners was capped at 3% because the consumer price index surpassed it.
For example, the cap was 0.1% in 2009, he said, which was due to a low level of inflation triggered by the economic downturn afflicting the nation.
"Last year, the cost of inflation was really low because of the economic recession," Mr. Garcia said, "but as things improved that affected the cost of inflation."
Save our Homes took effect in 1995 to protect homeowners, whose property values were rising each year, from being taxed out of their homes, especially as they approached retirement.
But instead of growing, the residential market meltdown sent Miami-Dade property values plunging over the past three years.
A new variable added to the mix is the foreclosure moratorium that several giant lenders have self-imposed to look into claims that sloppy documentation was being used in foreclosure court proceedings that have led many to lose their homes.
The freeze could affect home sales in Miami-Dade because prospective buyers could wait on the sidelines until more foreclosed properties are up for sale, Mr. Garcia said.
It’s unknown yet if lenders are going to put these properties back on the market all at once or gradually — and when that will be.
"That waiting period could hurt everybody," he added. "We look at sales activity and foreclosures when setting market values."