01/08/09

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Property tax break a small help

   
While the passage of Amendment One is widely considered a victory for the citizens of Florida, whether or not the property tax changes are giving the Florida real estate market a much-needed boost is debatable.

One thing is clear: Most Florida citizens feel that something is better than nothing.

Real estate professionals like Susan Ball, a sales associate with Coldwell Banker Residential Real Estate in Cape Coral, are hopeful that "current Florida residents will use this new option and exercise their ability to take advantage of our attractive prices."

In a nutshell, Amendment One doubles the homestead exemption for many homestead property owners to $50,000 and allows for the transfer of accumulated Save Our Homes benefits. According to the Florida Department of Revenue, homestead property owners are able to transfer their Save Our Homes benefits to a new homestead within one year and not more than two years after relinquishing their previous homestead. The transferred benefit may not exceed $500,000. Amendment One also authorizes an exemption from property taxes of $25,000 of assessed value of tangible personal property and limits the assessment increases for specified non-homestead real property to 10 percent each year.


Buyer flurry?

While many South Florida real estate professionals say they are seeing more buyer activity, some of it can be attributed to seasonal growth.

"In the last three months, I've had more activity in the marketplace," says Jeff Gaines, a broker with Gainesway Realty in Fort Lauderdale. "It's a miniscule pickup and I'm happy for that — more people are looking and making offers," says Gaines, a 26-year veteran who specializes in multi-family homes and condos.

Ball agrees. "I am certain the tax portability affected a sale I just closed," she says. "The sellers were more willing to negotiate with the buyers since they were allowed to move their considerable Save Our Homes savings on their Cape Coral home to their new homestead in Bonita Springs."

According to Broward County Property Appraiser Lori Parrish, "We have 4,168 applications for portability in my office right now. Some 98 percent of those are for up sizes [residents buying a bigger home]. After [Amendment One] passed, we saw more sales in two weeks than we've seen in the last quarter of last year." Parrish attributes that to pent-up demand. "We've always maintained that there would be pent-up need in 11,000 to 30,000 families. But, the economy is soft, and that combined with the subprime mortgage issue is slowing things down."

Still, Parrish says that Amendment One did what she believed it would do: "create a bleep in the market that hopefully will tide us over until the economy stabilizes again."

However, not all real estate professionals are as hopeful, particularly those who work with the burgeoning international and second homebuyer niches.
Good, but not enough

"Right now, the main problem is not that taxes are squeezing buyers' bottom lines; it's that the economy has pushed things out of reach for a lot of people," says Hemley Gonzalez, CEO of AffordableProperties.com, a Miami Beach-based brokerage.

Others agree that property tax relief was just one of the issues that needed to be dealt with to turn the market around. The other issues are the economy and the subprime mortgage crisis. "The mortgage debacle sucked out all the buyers from the market and left a small number of qualified buyers," says Gonzalez.

"The real problem is that all homeowners need to be treated fairly," says Naomi Hassig, a sales associate with Luxury Homes GMAC Real Estate in Boca Raton. "Tourism is very important, so by punishing the second home/vacation home buyer, you're [hurting a very viable section of our business]," she says.

Hassig, a 16-plus-year veteran who specializes in oceanfront condos and properties over $600,000, finds that international buyers are still buying. "I have three pending sales to international buyers who like that they can buy when the dollar is weak. However, it's entirely unfair that they're paying triple the taxes of their neighbors," she says.

In addition, says Parrish, "You do have some buyer apprehension because of the lawsuit filed concerning the constitutionality of Amendment One." Immediately after Amendment One was passed, a class action suit was filed, arguing that the portability issue is unfair. Parrish says the suit is without merit and that last year the same lawyers filed an unsuccessful suit challenging Save Our Homes. "However, I'm hand signing every application and putting the state seal on it in addition to preapproving them for 2009. I'm giving them a vested right in case the issue does come to a court action." Parrish doubts it'll come to that, pointing to the fact that 71 percent of Broward voters voted yes to the amendment.


What can be done?

For real estate professionals, getting the word out to the people who will benefit the most from Amendment One is vital.

"Depending on how the sale is structured, there are tax benefits to international buyers," says Gonzalez. "It seems the state [tourism officials] could do a soft pitch campaign about the benefits of this new tax code. If you want to get people involved from abroad, where many of the qualified buyers are, you have to make a case for it."

Ball took a proactive approach as well. "I've contacted the people who bought and sold property with me who might have been affected by Amendment One. They took advantage of transferring their Save Our Homes savings to the property in which they are currently living."

Regardless of whether or not buyers are making moves, most in the industry agree that Amendment One was necessary. "It's good that something is being done and, while it may not make a huge difference [to the real estate market], it's a little bit of help and we need that now," says Gonzalez.