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Old 04-17-2010, 11:16 AM
 
Location: Utopia
1,999 posts, read 9,424,022 times
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I know the property tax laws have changed recently in Florida (2009 I think). I am interested in relocating there, but I still don't understand what that means if I buy a new condo there.
Since I keep reading that the folks who owned condos before this law passed will be paying much lower property taxes than new condo residents that purchase after the passing of this law, but what does this mean? Yes, I did look at Florida Tax Watch which is supposed to explain it quickly but I didn't find the explanation.
Before I make a huge mistake and purchase there, can someone explain please what this new tax law means to those of us who are interested in purchasing a condo now that this law has passed? I am just not getting it....
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Old 04-17-2010, 11:45 AM
 
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The most recent prop tax law passed that I'm aware of was a psuedo save our home clause for nonhomesteaded property which, I believe, limits amounts upon which those properties can be appraised annually to 10% greater than the prior year, giving those properties some measure of protection.

The most significant change before that was our save our home (soh) portability issue, of which, after many years of residents feeling locked into their houses by property taxes, passed just in time for the housing crash to lock everyone back in their homes. No good deed goes unpunished.

The difference between what longer term homestead holders and newbies pay in taxes has been hugely minimalized by the housing crash, which now has many properties priced at 1990s or early 2000s prices. As well, due to Florida's recapture rule, while existing homeowner's have seen their home values crash, they've also experienced a decrease in the difference between their soh values and market values, which can rise as much as 3%/annual even as prices deteriorate.

So, basically, I guess what I"m saying is forget about it. This is by now pretty much a non-issue. But if you are still very concerned about how much less your neighbor will be paying in taxes than you might be paying, buying in at/near bottom, then just think how jealous the next generation of buyers will be of you.
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Old 04-17-2010, 05:49 PM
 
3,923 posts, read 10,292,044 times
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The biggest change for Florida condominium owners was the enactment of legislation that now requires homeowner's insurance for full replacement value of each unit. Here's a link to the statutes ---> Statutes & Constitution :View Statutes : flsenate.gov. It's a very real issue, especially for owners who have no mortgage on their units and have historically only paid the association maintenance fees.
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Old 04-18-2010, 01:56 PM
 
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Hadn't heard of this. A precursor to mandatory health insurance? Did the condo have too much bargaining power when buying in bulk? Does condo insurance as part of association fees no longer pay for the exterior of the building? What is meant by "full replacement value of each unit"? Is the entire building no longer responsible for, say, individual balcony repair/replacement?

I wonder who lobbied that? I might be able to understand the intent of trying to keep up a unit in a building where the one unit could effect the price of others in the same building, but just because someone has insurance does not mandate they use claim proceeds to fix it.

What's next? A mandate for granite countertops?
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Old 04-18-2010, 02:37 PM
 
Location: Niceville, FL
7,647 posts, read 16,033,018 times
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My guess would be that it's in response to the under-insurance problems some complexes had when damaged by storm in 2004-05 which led to $25K-$50K+ special assessments for some homeowners.
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Old 04-19-2010, 01:43 AM
 
Location: western East Roman Empire
6,558 posts, read 10,628,239 times
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Quote:
Originally Posted by TootsieWootsie View Post
I know the property tax laws have changed recently in Florida (2009 I think). I am interested in relocating there, but I still don't understand what that means if I buy a new condo there.
Since I keep reading that the folks who owned condos before this law passed will be paying much lower property taxes than new condo residents that purchase after the passing of this law, but what does this mean? Yes, I did look at Florida Tax Watch which is supposed to explain it quickly but I didn't find the explanation.
Before I make a huge mistake and purchase there, can someone explain please what this new tax law means to those of us who are interested in purchasing a condo now that this law has passed? I am just not getting it....
The latest change came, I believe, in 2007, applicable in 2008.

Property taxes are based on the county tax assessor's perception of market value (usually below actual buy price). Then, if the owner qualifies for homestead, there is a $50,000 deduction from that market value, for final assessment value, times the millage rate. The exemption used to be $25,000.

For example, $225,000 purchase price, tax appraiser's market value $200,000, homestead exemption $50,000, assessed value $150,000, millage rate 2%, tax $3,000.

However, the assessed value cannot increase more than 3% a year in case market value increases at a faster pace. In other words, once you buy, your assessed value is "locked in", though with a potential rate of increase of 3% per year.

Also, as mentioned, there is now a 10% per year increase cap on non-homesteaded properties.

Indeed, property taxes became an issue at the peak of the bubble. Now that prices have come off, it is less of an issue.

Florida has no state income tax and, though to some property tax may seem high, it is on par or lower than in most northeastern states, at least, buy prices are around half those in California, and property taxes are higher in Texas.

As for insurance and maintenance, well, Florida is often a hostile environment to such human endeavors as house construction and maintenance costs are high. Against that, most people nowadays want such things as expensive amenities and green lawns, etc.

As for the condo insurance thing, my understanding is that there is some debate over the interpretation of the law. It says that the condo association may purchase a causalty and liability policy for the individual unit and collect on the cost.

In any case, since, I believe, the individual unit owner is responsible for damage to his own unit coming from outside, it is probably a good idea.

Unfortunately, it is expensive for older buildings pre-2005 code. For newer buildings, it is not so bad.

In short, if you want Florida, you must understand that it is a hostile environment to an industrialized society and if you want all the amenities that come with it, you have to pay a price to maintain them.

For most people, best is to choose a relatively small unit but in a newer construction building. Unfortunately, despite the recent boom, in many places there is still actually a shortage, especially in terms of good quality with well thought out architecture, spatial design, and surrounding urban planning: Americans are not known for their good taste in aesthetics or their astuteness in the use of space.

Good Luck!

Last edited by bale002; 04-19-2010 at 02:40 AM..
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Old 04-19-2010, 08:04 PM
 
1,474 posts, read 3,075,716 times
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Thanks to all of the posters above. I've been wondering about this myself but this has been the clearest discussion I have found. I think I have talked myself out of buying anything in FL for now. Some smart people are saying the real estate elevator has not reached the bottom floor by any means. I feel for those folks who bought at the top of the market. Awful situation for so many.
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