Home Values are dropping, so why did my Taxes go up?

Florida law sets January 1 as the assessment date each year for determining both value and exemption eligibility. January 1, 2009 is the date used for setting your assessed value for the August 2009 TRIM Notice and November 2009 tax bill. the 2009 value was based upon the market value for similar properties in the same or comparable subdivisions during January 2, 2008 - January 1, 2009 (with the greatest weight given to sales from the final quarter of the year). Any 2009 drop in market values will be reflected on your 2010 assessment and tax bill. Likewise, in a year when values increase, those increases will not be reflected until the tax bill the following year.

Under Florida law, a homestead “recapture” rule may cause some taxable values to rise even when the overall market value dropped from last year.

If you purchase a property in a foreclosure, your actual purchase price may not reflect the just (market) value used for determining your taxes. Although the Florida Department of Revenue (DOR) issued an advisory opinion that foreclosures generally should not be used for assessment purposes, DOR wrote that Property Appraisers may qualify a foreclosure sale if the property was listed for sale on the MLS open market and the property is in normal/good condition. Tax Year 2009 is the first time in which DOR is allowing foreclosure sales to be qualified in determining assessments. ThE DOR believes -- and those MLS-listed foreclosure sales are arm’s length “normal market condition” sales under the current recessionary economic conditions and reflect market values. They also qualify short sales, using the same criteria they use for foreclosures. Regardless of your purchase price, assessments in Florida are done a year in arrears.

This means your 2009 assessment will be based on the sales in your neighborhood (excluding non-arm’s length transactions and other “disqualified” transfers) between January 2, 2008 and January 1, 2009.

If you are Homesteaded and your “Save Our Homes” (SOH) value is less than the market value as of January 1, Florida Administrative Code Rule 12D-8.0062(5) explicitly orders the property appraiser to increase your overall assessed value each year (up to the 3% annual cap level) until it eventually reaches the same amount as the market value.

Although the Department of Revenue set this year’s SOH cap rate at 1/10 of 1% -- meaning your Homesteaded assessed value will be almost unchanged from last year -- you will likely not experience any noticeable decline in taxes even though your market value dropped. Roughly 40% of Walton County homeowners will experience the recapture effects of this law -- mostly owners who purchased and homesteaded their properties before 2003.

Talk to your State Senator and Representative if you believe this recapture provision should be amended or repealed.