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Florida's Save Our Homes tax benefit loses luster

Because of a little known or understood provision of the Save Our Homes law, 106,000 Pasco homeowners will be in the unpleasant position of paying higher property taxes even though their homes' market values decline or stay flat.

It's called "the recapture rule," but Property Appraiser Mike Wells has a more pithy way to describe it.

"Damn confusing."

Here's an example of how it works:

Say a home had a market value of $300,000 but has a much lower assessed value of $200,000 — because the owner has for years enjoyed the 3 percent cap on annual increases in property taxes.

Now, because of the housing bust, the market value of the home drops 5 percent, or $15,000. The homeowner might reasonably expect to pay taxes on the lower amount, in this case, $285,000.

But the recapture rule demands that appraisers raise assessed value until it reaches the market value. So, our homeowner sees his assessed value increase by 3 percent, or $6,000, to $206,000.

How could Save Our Homes, designed to lower taxes, permit a tax increase at a time of falling home values?

In 1992, the 3 percent Save Our Homes tax cap became law.

But in 1995, Gov. Lawton Chiles approved a rule that applies during times of declining assessments. It requires property appraisers to raise the assessed value of a home until any tax benefit from Save Our Homes is eliminated. This is why it's called the "recapture'' rule: Government is recapturing revenue it lost due to the tax cap. The state Department of Revenue had asked for the additional rule to minimize the government's revenue losses under Save Our Homes.

Because property values generally increase over time, the housing bust of the last two years represents the first time the recapture rule will have wide effect. The Broward County Property Appraiser fought the rule in court in 1995, but an administrative law judge upheld its validity, according to an e-mail sent Friday by the department's spokeswoman Renee Watters.

Without the recapture rule, Wells said, this year's estimated $3-billion decline in the county's tax rolls would have been $5-billion.

The rule affects a large majority of Pasco's 130,000 homeowners.

"About 75 percent of homesteads are going to see this (assessment) increase because of the 3 percent rule," Wells said.

As for the rest, about 24,000 homes, Wells said most avoided the recapture rule because their homes are relatively new and their market values have not grown sufficiently to outpace assessments.

He said the rule is one of the toughest things to explain to taxpayers.

Wells plans to include an explanation of the issue in an insert to accompany the Truth In Millage, or TRIM, notices that his office sends to taxpayers around August.

Chuin-Wei Yap can be reached at or (813)909-4613.

Florida's Save Our Homes tax benefit loses luster 06/01/08 [Last modified: Saturday, June 7, 2008 8:18am]
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