Lower assessments and higher property taxes - it can happen in some Florida counties next year.

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Services for Real Estate Pros with Real estate commentator; GoToby.com, Take Action Propertiesi

Palm Coast, FL - I had an interesting meeting with Jay Gardner, Flagler County's Property Appraiser a few days ago. Our discussion dealt, in part, with Palm Coast and Flagler County's declining property values and the effect the decline might have on individual property taxes next year. Many counties in Florida will experience the same problems next year.

The Property Appraiser's job is to determine each property's just (market) value. To do this, his staff examines sales of "comparable" properties. By state law, each year's tax roll is determined by sales the previous year. Thus, each property's just value for the 2007 tax roll is based solely on comparable sales in 2006. Most of the decline in property values occurred since the first of this year so the effect will not be felt until the 2008 tax year.  Following are some examples of Flagler County's declining property values.

  • In January 2006, the median price for a Palm Coast lot (exclusive of salt water canal lots) was $77,000. By the end of 2006, it had dropped to $62,500. In the most recent three months, the median sales price was down to $40,000.
  • The January 2006 median sale price for a single family residential home was $252,250. It dropped to $229,500 by December. It was $209,500 last month.

With your property's just value dropping, you might think that your property taxes will go down as well. Not if you are homesteaded. Your property record indicates four different values:

  • Just value - roughly approximating market value
  • Assessed value - generally lower than just value for homesteaded properties because increases in assessed value are limited to the increase in the consumers' price index (CPI) or three percent, whichever is less. For non-homesteaded properties, the assessed value equals the just market value.
  • Exempt value - $25,000 for homesteaded properties. Other exemptions may also apply.
  • Taxable value - assessed value minus exempt value.

The table below shows my house (homesteaded) compared to my house without the homestead exemption. We moved into our home in 2001, so the homestead exemption applied as of January 2002.

Homestead vs. Non-homestead Valuation
 

Homesteaded

Non-homesteaded

Just  Value

$399,901

$399,901

Assessed Value

296,321

399,901

Exempt Value

25,000

0.00

Taxable Value

271,321

399,901

The assessor does not set the tax rate. He only determines the total taxable value of all property for each taxing district in the county. The various taxing districts (county and city) determine their individual budgets. Each district's millage rate is derived by dividing their budget by the total taxable value (within the district).

Over the past seven years, homesteaded property owners have been shielded from the huge increases (442%) in both city and county budgets. That's because the huge budget increases were matched by huge increases in the total taxable value, both from increases in the value of existing non-homesteaded property and from new construction.

Flagler County Taxable Value

Year

Taxable Value

2000

$2,756,505,596

2001

3,210,315,937

2002

3,745,981,194

2003

4,553,698,418

2004

5,785,625,646

2005

7,932,905,478

2006

10,958,081,820

2007

12,184,917,324

In a simplified example, let's assume that next year's budgets are the same as this year. If everybody's taxable value dropped by the same percentage, the result would be no change in your tax bill. That's because the millage rate would rise so that everyone would be paying the same amount as this year. The real world is not a simplified example, however.

  • The taxable value of a non-homesteaded property will drop by the same amount as its just value, which also equals the assessed value.
  • For homesteaded property, assessed value can still increase up to 3% even while just value falls as long as it remains equal to or less than the just value . Your taxable value and taxes can rise even though your propery is declining in value.

How would a 10% decrease in overall assessed value effect homesteaded vs. non-homesteaded prooperties? Let's look at my house again to see. Note that the assessed value can rise by 3%.

Homestead vs. Non-homestead after Just Value Decrease
 

Homesteaded

Non-homesteaded

Just Value

$359,911

$359,911

Assessed Value

305,211

359,911

Exempt Value

25,000

0.00

Taxable Value

280,211

359,911

The homesteaded taxable value rose while the non-homesteaded taxable value dropped. Even if the millage rate remained unchanged, my taxes would increase. For the millage rate to remain unchanged, the city and county would have to decrease their budgets by 8 - 10%. This is unlikely. Thus, we homesteaders can probably look forward to a combination of increased millage rate (taxes) and reduced government services. This might be what it takes for government officials to realize the importance of an industrial and commercial tax base.

Toby Tobin is Editor & Publisher of GoToby.com, the popular real estate news, information, and analysis website for the City of Palm Coast and Flagler and Volusia counties in Northeast Florida

Comments (3)

Lisa Hill
Florida Property Experts - Daytona Beach, FL
Daytona Beach Real Estate
Very informative post. You're very knowledgeable on this subject. You did a great job of explaining it.
Nov 21, 2007 04:15 AM
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos
Toby,  Thanks for tacklig this complex subject !  Have a terrific Thanksgiving !
Nov 21, 2007 04:23 AM
Anonymous
Anonymous

Very informative, but now how do we keep from being taxed out of our homes?

Feb 08, 2009 11:50 AM
#3