Tax-cut proposal could offer relief to homeowners

TALLAHASSEE -- At the heart of the tax-cut package poised to pass the Legislature as soon as Wednesday is a possible escape hatch for Floridians who feel trapped in their homes by the tax savings they would lose by moving.

It's called "portability" -- a provision allowing homeowners to carry with them Save Our Homes tax savings accumulated in their old home when they buy a new place.


Republican leaders who crafted the $11 billion tax-cut proposal are calculating that it will stand a better chance of winning approval at the polls Jan. 29 with portability, something homeowners, especially in South Florida, have been clamoring to get for years.

It's also widely considered the part of the tax package that could do the most to jump-start the stalled housing market. The hope: With longtime homeowners no longer facing big increases in their tax bills if they move, more will sell their homes and buy new ones.


There's just one problem: Lawmakers still aren't sure the plan could withstand a legal challenge.

Last spring, lawmakers commissioned a report by University of Georgia tax lawyer Walter Hellerstein that raised federal constitutional concerns about portability.

People moving into the state and buying homes would be penalized, he wrote, compared with longtime Florida homeowners who had built up big discounts they could take with them.

Lawmakers and Gov. Charlie Crist's office think another part of the tax-cut package -- giving anyone buying a home in Florida for the first time a 25 percent discount on their property values -- takes care of that disadvantage.

"This concern about being out of Florida and not being treated fairly -- you may end up doing better than some folks," said George LeMieux, Crist's chief of staff.

Hellerstein said it sounded as if the idea "helps."

"The problems were based on the disadvantage that newly arrived homeowners would have vis-M-'-vis longtime homeowners," he said. "If Florida is doing something to make that disadvantage less, at a minimum it seems to help and at most it solves the problem."

So far, no opposition to portability has emerged.


Millions of Florida homeowners have amassed billions of dollars in tax breaks, thanks to the 3 percent Save Our Homes tax cap in place since the mid-1990s.

"I really didn't realize the importance of the Save Our Homes thing until we moved and saw the difference it makes," said Stephen Cluney, 64, who moved with his wife, Donna, from just outside Orlando to Groveland in late 2005.

Although they left a $295,000 house for one valued at $240,000, losing their Save Our Homes savings meant their tax bill climbed from $1,900 to $3,100.

Senate Majority Leader Dan Webster, R-Winter Garden, wanted to replace Save Our Homes with a bigger homestead exemption -- up to $195,000 for a $500,000 home. Over time, he said, that would eliminate Save Our Homes and the inequity of someone who has lived in a house 10 years paying half the taxes of someone who bought a similar home last year.

But a plan to do that, approved by lawmakers in June, languished in polls and was ultimately tossed off the ballot by a judge who called it misleading. Webster said internal Republican Party polling now shows dramatically more support for Save Our Homes.

"In my mind, the super exemption was the better way to do it. But if the public won't vote for it, it doesn't matter what you propose," Webster said.


Democrats had pushed a competing idea earlier this year to let homeowners take some portion of their Save Our Homes discount with them, but to allow their tax bills to then grow faster than under Save Our Homes after they moved.

The idea went nowhere, mainly because Republicans saw no need to pass portability when they were trying to phase out Save Our Homes entirely.

Now lawmakers intend to do the opposite -- ensuring that Save Our Homes tax break can follow a Floridian for life.

"They learned from their mistake that Save Our Homes is here to stay," said Lee County Property Appraiser Ken Wilkinson, the original architect of the 1992 Save Our Homes amendment.

The new package cobbled together last week also would provide a second, $25,000 homestead exemption, eliminate all property taxes for low-income seniors, give tax breaks to commercial waterfront property and make it easier to appeal property appraisals.

Together, those changes are expected to create a roughly $2 billion drain on local governments next year, as opposed to the $3.6 billion hit they faced under the original homestead option.


"It does appear to be less of an impact," said Orange County Commissioner Teresa Jacobs, who is also president of the Florida Association of Counties and attended hearings on the tax plan Monday.

Though one of the selling points of the proposal was that it would be kinder to public education, the pieces of the plan that would exempt low-income seniors and business purchases from property taxation are expected to cost schools $2.1 billion over four years, lawmakers were told Monday.

"It is absolutely clear to me that nobody honestly believes we'll make up that money," said Senate Democratic Leader Steve Geller of Cooper City.