New York Times wrote an article today on a subject that has been rolling around my pretty little head lately.
Since insurance rates and property taxes seem to be clouds over the Miami real estate market, then the anticipated lower taxes on declining property values will be the silver lining of that cloud.
While every state and local government has its own methods for assessing home values for tax purposes — some do it annually, some every five years, and everything in between — many counties are hearing from residents that they would like their homes reassessed, or have taken steps to bring the taxes down of their own volition.
From my estimation, property values have been declining in certain markets for about 1.5 years. When will the county tax assessor re-assess property values?
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December 23rd, 2007 at 5:32 pm
What is the difference what a property values assess at and when it is reassessed? The county budget remains the same so if they lower the assessments, then they just have to increase the rates or tax us in other ways. Do you really think for a minute that just because your home lost value you will be paying less taxes and that the county will suddenly stop spending so much? We pay taxes to satisfy a budget.
What is far more interesting is that with all the new condos coming online east of 95 from Brickell through the Design District (and Miami Beach), these 100s of millions of dollars of real estate will join the tax roles whether it is actual homeowners, developers or banks that end up paying the new tax money.
December 24th, 2007 at 12:24 am
Great topic for discussion! Here in Broward County, Lori Parrish is pushing for Yes to Amendment 1, which if instituted, would lower monthly property taxes by a whopping $60.00 to Broward residents!
What happened to the proposal by now Governor Christ that discussed eliminating Florida state property taxes and increasing sales tax a few cents? What would you rather pay and average of 2% of the sales price of your home per year or a few extra cents when you go out to eat dinner or buy a shirt at the mall?
Without a major decrease in state property taxes, our market will continue to decrease in value. What happened to all of the money the counties were making when prices in Florida increased by up to 40% or more in some areas?
December 27th, 2007 at 12:49 pm
My point remains the same…converting property taxes into sales taxes without real reduction in gov’t budgets will mean people who own their home will probably end up spending about the same amount per year in taxes with the only advantage that it might increase real estate values. The downside for society is that people who rent (generally the lower economic stratas) will likely pay more in taxes (pay more sales tax) while their landlords get the tax reduction.
With the market reeling from an oversupply, I just can’t imagine that reducing real estate taxes by a few hundred dollars will have any impact on prices.
This all seems pretty heartless to me!
December 27th, 2007 at 8:40 pm
Very interesting conversation here. My thought is that the city and county budgets are so over-inflated because of the increasing dollars that have been pouring in from real estate taxes without regard to being prudent about spending said dollars.
Now it’s time.
December 28th, 2007 at 9:13 am
Can’t agree with Steve, especially when you consider the importance of non-homestead in the tax base. If Floridians who consumed Floridian services 365 days a year paid a fairer percentage of the tax base based on consumption not some good old let’s get the out-of-staters, there might be a fighting chance.
I promise you that if the property tax on a $1m condo or SFH was 1 to 1.5% of assessed value all-in, you’d see an entirely different non-resident market interest today.
But, tell me, why should I pay $25,000 a year in taxes alone on a $1m home in Miami Beach?
Absurd by all global standards of real estate taxation.
December 29th, 2007 at 11:37 am
I agree Kevin. When the Broward County Tax Appraiser Lori Parrish spoke two weeks ago, she basically told me when I voiced my concerns that homeowners are forced to accept the new Tax Amendment. She said that it is like trying to have your whole cake instead of one piece. Basically, she said to accept the small break in taxes or keep paying the higher yearly dues. I feel it is like the gov’t saying let’s give just a small break to shut the people up for a little bit!
December 30th, 2007 at 10:19 am
I got my tax bill last month.
What a joke! My unit at the Mirador was taxed at 2,000 bucks last year. This year? $3,800.
Um, excuse me, are you fucking joking?! Does anyone actually think the units in the Mirador increased in value?
January 3rd, 2008 at 3:10 am
While many states assess property at a percentage of its market value, the Miami-Dade Property Appraiser is bound by Florida Statutes to assess property at 100% of its market value. However, assessments in Miami-Dade (as a whole - keep in mind that its mass appraisal) usually fall within a “safety net” ratio of 85% (assessed value to sales price) after considering the cost of sale.
The Florida Department of Revenue (DOR) audits the tax roll every year in July. They must certify it before TRIM notices are mailed to property owners in August. If the ratio discussed above is not “compliant”, they will notify the Appraiser’s Office and kindly hint that some assessments need to be adjusted upwards.
Taking Candela’s example in which his/her property tax bill increased 90% from one year to the next (I can empathize), chances are that the property was “under assessed” the previous year and when the market was analyzed for 2007, his/her unit’s assessment was raised to reflect a value closer to the unit’s true market value.
Keep in mind that the assessment date for the 2007 tax year is January 1, 2007. In other words, the market value of the property should reflect what the property was worth as of that date, not the date that one receives the tax bill (late October). The Appraiser’s Office usually analyzes sales as close to that date as possible (large enough sample permitting). October, November, December, January and February sales are best indicate what the value of that property was as of the assessment date.
Had Candela’s unit been his/her primary residence, he/she would have benefited from a Homestead Exemption that would have capped the assess value (not the market value) of the property at 3% or the Consumer Price Index for 2006, whichever is lower.
Unfortunately, a lot of “investors” who rent out their condo units don’t factor this into their operating expenses and are left with a HUGE negative cash flow and a poor investment. Furthermore, the Appraiser’s Office will not apply the Income Approach of valuation to a residential condo unit because a condo unit’s highest and best use is not as an income-producing property.
I don’t think that the Appraiser’s Office is at fault. Assessments - for the most part - fall below a property’s true market value (of course, there are cases where properties are over assessed, but that’s the exception, not the norm…and believe me there is a whole industry of attorneys and tax agents that has made a generous living out of getting assessments lowered at the Value Adjustment Board).
The property’s value is just one side of the property tax equation. If municipalities and politicians are serious about lowering taxes, all they have to do is significantly lower the millage rate, not just lower it $0.30 and then publicly state that they lowered taxes.
January 10th, 2008 at 8:42 pm
Very well put Adrian. When will floridians understand the property is with goverment spending and the millage rate not the assessed value. When are you running ?? I’ll vote for you!
January 15th, 2008 at 1:22 am
Ray,
Unfortunately (or fortunately - depending on who you ask), the Miami-Dade Property Appraiser remains the only appointed Property Appraiser in the state of Florida, but maybe not for long. If I remember correctly, it will go on the ballot on Jan 29, 2008 for voters to decide. The Property Appraiser could very well become an elected official. However, this issue’s been so silent that I’m not even sure if it’s finally going on the ballot.
I personally don’t feel that an administrative position (”Property Appraiser” is just a fancy name for what’s really the department director), especially in Miami-Dade, should become politicized. The only ones that stand a chance of running AND winning are career politicians who will fill important ADMINISTRATIVE positions with their cronies.
The Property Appraiser, elected or not, has to abide by Florida Statutes - plain and (not always so) simple.
It will be interesting to see how this plays out. It’s good to know I got at least one vote if I were to decide to run.