Killing Property Taxes in Florida - Will That Really Help Grandma and Grandpa?

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Mortgage and Lending with On the Outside Lookin' In

19 April 2007

I'm not trying to whip a dead horse.

Life can throw a few curve-balls at you - some of which open eyes to a different viewpoint, a different paradigm.  I think my mind's been in Florida a bit lately, especially with reports coming in about my wife's uncle who is in the hospital down there.  I guess you mix that with David Podgursky's blog and an event that happened a few minutes ago, and for me, an idea akin to an epiphany moved to the surface of my mind.

The catalyst to the new viewpoint came from a very simple comment from Michael Fooladi, who comments in my Would You Trade SALES TAX for PROPERTY TAX?  blog.  Michael simply wrote, "Absolutely.  Raise the sales tax and do away with property taxes."  I then thought of the "old timers."

Wouldn't it be something if our Older Adults (the PC form of Senior Citizens) - which are our current Moms and Dads, Grandmas and Grandpas right now (and will be us some day) could actually LIVE on their social security, savings, and retirement funds!?  With NO Property Tax they could even truly OWN their homes.  Completely!  Currently, if they don't pay property tax, they could lose them.  But imagine a situation with 100% ownership, no property tax, and maybe even no insurance!  Full ownership.  What a novel idea!

If the burden were switched to Sales Tax, the older adults - who are in their low consumption years - would really get a break.  Would this turn Florida into a gigantic retirement home (insert pun here) filled with semi-destitute retirees?  I doubt it - real estate prices a too high for that to happen.  There would be changes, but I don't think insurmountable ones.

The more well-heeled retirees could throw more money (and sales taxes) into the economy as thFast Clockey'd have more to spend.  And the wealth from inheritances - which could be greater - could churn the economy, too.  It'd mean less financial burden on the middle-aged children who sometimes supplement their parents living, so again more money for other things. 

Of course I'm thinking ideally here for one segment of society. But our aging citizenry - many of whom have given to society for decades and decades - could really benefit from my simplistic observation.  After paying for school and government for 50 to 70 years, might someone say, "Stop. Thanks - you've done your part." at some point?

It is quickly becoming nothing short of a crime to grow old in America.  Does Florida have a solution, even if only as a side effect?

Art Blanchet

Bill Quigley

 

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Rainmaker
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No Longer Active
Real Estate - Fallon, MT

This not only can be applied to property tax but income tax also.  All the under-the-table people that cheat the system would pay taxes on the money they spend.  It is crazy to be forced into paying social security all your life and then be taxed on the benefits.  Many older folks in my area are selling prime homes near the water that they have owned for years simply because they cannot afford to pay more in monthly taxes than they paid for their mortgage.

My view on taxes... It's time for a Boston Tea Party!

Apr 19, 2007 06:40 AM #1
Rainer
302,425
Terry Haugen STAGE it RIGHT! 321-956-2495
Stage it Right! - Melbourne, FL

Property taxes arent the real issue here, its insurance.  All of us have homestead exemptions with a 3% cap on increases.  So year to year our taxes don't go up that much.  BUT combine the increases with the astronomical insurance rates and now we have a problem.  Older people are no longer able to keep their homes because of the insurance rates.  Most older people live in older homes, older homes are insured only by the state insurance company Citizens, which has a mandate to charge more than the highest going rate in any given area.  I don't understand why we are all bitching, excuse my french, about taxes when insurance is the culprit.  Doing away with property tax and raising the sales tax is going to hurt the poor, no me, not you, not the older people.  I'd love to be free of the tax hit but not at the expense of people who have less than I do.

Terry Haugen - STAGE it RIGHT!

Apr 19, 2007 02:31 PM #2
Rainer
302,425
Terry Haugen STAGE it RIGHT! 321-956-2495
Stage it Right! - Melbourne, FL

Property taxes arent the real issue here, its insurance.  All of us have homestead exemptions with a 3% cap on increases.  So year to year our taxes don't go up that much.  BUT combine the increases with the astronomical insurance rates and now we have a problem.  Older people are no longer able to keep their homes because of the insurance rates.  Most older people live in older homes, older homes are insured only by the state insurance company Citizens, which has a mandate to charge more than the highest going rate in any given area.  I don't understand why we are all bitching, excuse my french, about taxes when insurance is the culprit.  Doing away with property tax and raising the sales tax is going to hurt the poor, no me, not you, not the older people.  I'd love to be free of the tax hit but not at the expense of people who have less than I do.

Terry Haugen - STAGE it RIGHT!

Apr 19, 2007 02:31 PM #3
Ambassador
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Celeste "SALLY" Cheeseman
Century 21 Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE

My mom's 79 years old, property taxes went up double (city assessed all our properties 80-100k more from last year...my mom's LAND is assessed at 600k alone) And insurance went up as well. Because our GET tax went up we independent contractors are getting double taxed....on our commission as well as when we buy products.  And this is for a rail system that most of us will never use.  Anyway, my mom should be retired. She is still working 4 days a week at a country club .... she is still spry and golf's twice a week and watches it all day sunday....but she should not have to be working so hard when she has paid off her house years ago! And all these rising taxes and insurance hurts everyone's pocket book!  We have so many homeless on the beaches because they lost their homes due to rising property taxes and insurance and cost of living in Hawaii. My mom is not rich....she is in the poor category at this point. As are a lot of the older and elderly people here.    And what about medical insurance? My mom can't quit work....and live on Social Security.  All of these things are affecting old timers....and pretty soon we all will be there....and it will be 10 fold higher!  Okay...done venting.

Apr 19, 2007 04:11 PM #4
Rainer
130,560
David A. Podgursky PA
THE PODGURSKY GROUP @ Re/Max Direct - Boynton Beach, FL
THE PODGURSKY GROUP - Make the Right Move!

there is so much to talk about in this post... I might just have to link to you in my follow up

if we keep going back and forth like this, I'll get writers cramp

Don't know where to start...

Sally ... I agree with you about your mother.  My Aunt was like a grandmother to me.  My dad's oldest sibling and she passed away 4-5 years ago at age 75.  She worked her whole life and HARD.  She spent the last years of her life taking care of her daughter, 21 years her junior who was a paraplegic due to diabetes.  I don't know that there is an easy solution to this problem... but my personal take is that it isn't up to the Federal Governments or State Governments - what the modern age lacks is community...

Art and Bill

If the burden were switched to Sales Tax, the older adults - who are in their low consumption years - would really get a break.

If it only worked that way... the thing is that here in Florida, many Retirement communities are on Rec Leases... meaning there is no ownership in common areas for homeowners.  Condo management starts ownership at the door and then a master condo association takes all other common areas.  So this means essentially that many retirees are renting AND owning.  I did a loan for a woman in one of these communities.  $125,000 purchase price... her monthly HOAs are $370! And few lenders will touch those communities.  The single family housing communities that are 55+ also have high HOAs but do allow common interest.  But the HOA does more maintenance... they mow Grandma and Grandpa's lawn, pressure clean their drive, change their lightbulbs outside...etc... and plan activities daily for them! 

So there are perks to being in these facilities...

so what does the sales tax really do to them? as renters or owners - increases their cost of living.  Even if they owned their homes outright which I do not like the idea of for them... they still have high HOAs.  Then there would be debate over sales tax increasing those fees!  On top of that, all their budgetting and discounting will have to adjust to the prices at groceries, the gas pump, and restaurants going up as well.  Sure - by 2 cents on the dollar in Palm Beach County - but fixed income is fixed income

That is part of the reason I dedicated a series of posts on Mortgage and Financial planning for these people.

The more real benefit of the tax bills on the table right now are that long time homeowners will benefit because they can soon take their low tax base with them after they are lowered back to whatever year is agreed upon.  Portability of Homestead is super pressing for the 55+ retiree community AND the middle class and will likely be the one piece of legislation to help the most for everyone AND stick in whatever compromise is made.

Apr 21, 2007 03:23 AM #5
Rainer
130,560
David A. Podgursky PA
THE PODGURSKY GROUP @ Re/Max Direct - Boynton Beach, FL
THE PODGURSKY GROUP - Make the Right Move!

One last thing...

I think that there would be too many hurdles to overcome regarding "Thanks - you've done your part..."

and they come into play with Fair Housing/Equal Opportunity Housing and Equal Opportunity Lending...

how? well... these homeowners have to identify their ages to take a break like that... this is something that every mortgage broker has to account for on every application - with the ECOA statements... Equal Credit Opportunity...

I can get your Mom a 50 year mortgage regardless of her age... but that's because we CAN'T focus on it...

Focussing on it may just create another sub-group that wants to take the same break as they get. 

Right or wrong - I understand and empathize.  When my parents finally get to retire, I want life to be easy for them as well... but this State's flaw may just be that there is no income tax to offset the high property tax and sales tax just won't draw in the same dollars...

Let's hope Gov. Crist gets his casino taxes up and the Bio-Fuel alliance built up... then Florida won't need to worry about those revenues when we're the Bio-Fuel, Sugar and Orange version of Monte Carlo but with lots of retirees :)

Apr 21, 2007 03:27 AM #6
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Art Blanchet

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