Her three-bedroom home with arched doorways and Roman columns on a quiet cul-de-sac quickly soared above $300,000 in market value, but she pays taxes as if it's worth much less.
Pelton, a recent widow, now wants to sell and buy a more expensive property in Highland Beach with higher taxes. Under a Florida lawmakers' proposal scheduled to go before voters in January, she and other residents on the move could carry with them accrued tax savings up to $500,000. For Pelton, that would mean about $2,600 less in taxes for the first year in her new home.
This so-called portability is one part of a new tax plan that also would increase the existing $25,000 homestead exemption to about $40,000 and cap taxes for businesses and second-home owners. The package needs the approval of at least 60 percent of voters on Jan. 29 to take effect.
While portability would reward longtime residents, it would do nothing for first-time home buyers or retirees from out of state and may not immediately help people who bought at the peak of the housing boom in 2005.
"It's far from perfect," said Lori Parrish, Broward County's property appraiser. "But it's something. It's another tool in the toolbox for home buyers and sellers."
Portability grew out of an unforeseen consequence of Save Our Homes, the constitutional amendment approved by Florida voters in 1992.
The amendment was designed to keep people from being forced out of their homes by limiting property-tax increases to 3 percent a year. But the cap disappears when homeowners move, forcing them to pay substantially more in taxes because home values skyrocketed during the housing boom of 2000 to 2005.
Many South Florida homeowners are staying put to avoid those huge tax increases, and that has contributed to the housing market's malaise. Home sales across the region have declined for at least two years, in part because of the property tax implications people face when they move.
Proponents say portability would boost home sales, helping the beleaguered market recover. Here's how Pelton would benefit from buying a $450,000 condominium in Highland Beach:
Property appraisers in Palm Beach and Broward counties say they assess homes and condos at about 85 percent of the purchase price. For Pelton, that would be $382,500. After she subtracts the $40,000 homestead exemption, and the $135,406 in tax savings (the market value minus the assessed value) from her current home, her condo would then be assessed for tax purposes at $207,094.
Based on Highland Beach's tax rate of nearly 2 percent, her taxes would be about $3,600, which is roughly $300 more than the $3,272 she's paying now. Without portability, her tax bill on the condo would be about $6,200.
"That will be a big step to encourage people to buy and sell," Pelton said recently. "I can't see this failing once they count the ballots."
But John Mike, chairman of the Realtors Association of the Palm Beaches, said he's unhappy that the tax proposal doesn't help everyone.
"This is not enough to fix what has to be fixed," Mike said.
Despite the plan's shortcomings, Parrish, Mike and Palm Beach County Property Appraiser Gary Nikolits intend to vote for it.
"If you're hungry, and someone is offering you a loaf of bread, it's better to take it than to go without anything at all," Nikolits said.
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source: sun-sentinel.com
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