Two studies were conducted by different universities to analyze the impact of portability of SOH to local government’s revenue. The portability of SOH would allow a homestead owner to transfer the difference or part of the difference between just or market value and the lower taxable assessment of their current home to a new homestead within one year, as long as the assessed value of the new homestead is no lower than the previous homestead. Portability of SOH would result in an extension of the reduced assessed value from the previous homestead resulting in slower growth in overall total assessed values of a county’s homestead properties.
If a portability of SOH is adopted, the studies estimate that about 60 percent of home purchasers in Florida would be eligible to use portability and that 90 percent of those eligible would transfer all or part of their reduced assessment value. The study found that for every $2,000 in tax savings per year, a homestead would on average increase their stay by about two years.
In the first year for which portable SOH could be effective (2008), the statewide revenue loss is estimated at $57 million. Both studies estimate that the potential tax reduction for local government would range from $421.4 to $852.8 million in 2010 and $1.03 to $4.26 billion in 2020.
The primary purpose of a portable SOH is to reduce “lock-in” effect of homestead property owners that limits their mobility in selecting the most appropriate living quarters as the needs of their family change. One of the studies found that the average lock-in without portability will range from 0.9 to 1.6 years in 2010 and 0.8 to 3.6 years in 2020. If portability was allowed today, assuming an average Florida market price of $190,000, approximately $17.1 million will be collected in additional documentary stamp revenue due to the elimination of lock-in.
Potential Restrictions and Modifications of a Portable SOH bill
Limit the bill to those over 55 years old
- The average tenure for a homeowner in Florida was about 11.5 years, but for the 55 and over age group, the average tenure was about 15.3 years. Hence, a restriction on portability to those 55 and over would limit the use of the transfer to only about half of the potential users, and to those who would use it less often due to the higher average tenure.
Limit transfers of SOH to moves within the same county
- This will reduce the potential of homeowners who can utilize the portability. In Florida, about 67 percent of those who relocated within the last five moved to a different residence in the same geographic area.
Allow two years to sell, purchase or build, and transfer the reduced assessment value
- Allowing only one year to transfer the lower assessed value would reduce the flexibility for homeowners; therefore fewer homeowners would be expected to take advantage of the tax benefits provided by portability.
Limit the use of portability to once in a lifetime
- Limiting portability transfer to one time per family means that the household would most likely use the portability once and be forced to consider the effects of lock-in when deciding to move a second time since portability would not be available. Initially, there would be a reduction in the lock-in and more homes would be sold and purchased. Over time, only those who had been a first-time Florida homebuyer or who had passed up the use of portability would be eligible.
Florida Atlantic University Study
Florida Gulf Coast University Study (very large PDF file)
Courtesy: Florida Association of RealtorsSave Our Homes
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