Thanks to "portability" you can pay almost no property taxes (Homestead: new house)

[rogerbacon]

Why wouldn't this work with the new portability law.

Step 1: Buy the smallest, crappiest, cheapest place you can find, say $50k
Step 2: Declare it as your primary residence and file for homestead exemption.
Step 3: After one year transfer your homestead exwemption to your "new" residence, which is actually your $500k McMansion you've been living in all along. Now you will pay the property taxes on the $50k place plus a maximum of 3% more thanks to SOH. With the $50k homestead exemption that should come out to almost zero taxes.

Anyone see anything wrong with this plan?

[sarasarita]

What about does that live in a $1,000,000 dollars house and want to or have to move to a $300,000 dollar house or less ?

[fauve]

As I understand it, the just value of the old house is weighed against the just value of the new house, so say in the first 100k house you are paying around $1000 in taxes - 2% of $100k less the $50k exemption (50k x 2%). If you were to move after a year and the house has increased in value to $200k (unlikely, but easier math for me at the moment)...your taxes on the first house would have been $1k plus 3% (save our homes tax cap) or $1030 if you remained in the first house.

If the new house is valued at $400k, you would be paying $1030 on the first $200k of value plus 2% of the extra $200k for a total of $5030 instead of $7000 (400k less 50k x 2%) if you moved to the the second house initially. So you do save some money by buying a less expensive house first, but only a substantial amount if the first house has increased in value quite a bit, which is why the plan is criticized for favoring long term Florida homeowners.

If I have this wrong, someone please correct me, as this is my understanding and I wouldn't want to have it wrong.

[rogerbacon]

Originally Posted by fauve

As I understand, the just value of the old house is weighed against the just value of the new house, so say in the first 100k house you are paying around $1000 in taxes - 2% of $100k less the $50k exemption. If you were to move after a year and the house has increased in value to $200k (unlikely, but easier math for me at the moment)...your taxes on the first house would have been $1k plus 3% or $1030.

If the new house is valued at $400k, you would be paying $1030 on the first $200k of value plus 2% of the extra $200k for a total of $5030 instead of $7000 (400k less 50k x 2%) if you moved to the the second house initially.

If I have this wrong, someone please correct me, as this is my understanding and I wouldn't want to have it wrong.

I hope you are right. It would stop people from abusing the system as I describe (altough the entire system is an abuse since it shifts the tax burden unfairly but that is a matter for the courts to decide).

[sarasarita]

I don't think is bad that we abuse a little bit the system, sence they are actually abusing of us.

This is how you calculate your taxes for the year.

1- if your assessed value is 167,000 less the 50,000 tax exemption = 117,000 a.v.

2- depending on your tax rate for the year, lets say is a total of 23.9 mills (.0239)

for 117,000 x .0239 = 2,796.30 you will be paying for taxes for that year.

and for that 50,000 tax exemption x .0239 = 1,195 is what you will be saving for that year.

with tax exemption is 2,796.30
with no tax exemption is 3,991.30

this alway going to depend on the tax rate, and your assessed value for that year.

----for the 3% save our home this is what I learn just for your homestead property:

1- may be increased 3% annually (based on the assessed value for the prior year)
Or
2- the percentage change of the Consumer Price Index (CPI) for the preceding year, whichever is less.

(I'll come back with that formulas)


"and this is how portability will work for us"

Let’s assume that someone owns a homesteaded property with a Market Valueof $750,000 and an Assessed Value of $250,000. If you subtract the Assessed Value from the Market value you will find the Assessment Difference for this property is $500,000. If this owner sells this property and buys one of equal or greater value, he/she will be able to carry the full amount of the Assessment Difference (in this case $500,000) to the new property.

Assume that this person buys another property with a $900,000 Assessed Value. Since this person is carrying an Assessment Difference of $500,000, the Assessed Value of the new property will be $400,000. Since Amendment 1 increased the Homestead Exemption from $25,000 to $50,000 the Taxable Value of the new homesteaded property would be $350,000.

However if this property owner purchased a property valued less than his/her current property, he/she will only carry a proportional Assessment Difference to the next property.

If this owner buys a property valued at 60% of their current property value (in this case $450,000) they would only carry 60% of the Assessment Difference (in this case $300,000). The assessed value of the new home would be $150,000. Since it is a homesteaded property, they would deduct $50,000 Homestead Exemption and the new Taxable Value would be $100,000.

[tallrick]

This will not help any buyers today who are entering the market, or anyone else who has purchased a home since 2005.

[sarasarita]

Originally Posted by tallrick

This will not help any buyers today who are entering the market, or anyone else who has purchased a home since 2005.

Nop ,this will not help any buyer who is entering the market.. for now.

If you buy your home now (2008).. you will like how the 50,000k sounds right? .....so, you filed your application for your homestead exemption, like everyone else... and guess what! the nex year in (2009) your 50.000k comes in effect plus The 3% SOH for every year you stay with your house.

For the one who already owns a home they can apply for the 25,000k more and the 3% SOH still applies for every year.

I don't see any problem with that.

The famous "portability" only will be good when you sell your home and get another one. this is just one way of reducing your taxes.. but the funny thing is that the portability is not the problem...

the real problem is your tax rate that changes every year and you don't have any control of that!



Lets time tell what the real deal will be with this portability thing.