Should Floridians vote for Amendment 5 tax break in November?

Florida voters have the opportunity this November to hand homeowners more savings on their tax bills.

Should they?

Amendment 5, placed on the ballot by Florida lawmakers, would in most years increase the value of a tax break known as the homestead property tax exemption by adjusting its value to match inflation.

In other words, as the cost of living increases, so would the tax break afforded to those eligible for homestead exemptions: residents who own and live in their own homes.

“It will benefit Floridians, especially the ones that have issues with paying for their homes – the seniors and people who have lower incomes,” said state Rep. Alina Garcia, a Miami Republican who co-sponsored the bill to put Amendment 5 on the ballot. “It’ll benefit them because taxes are probably out of control because property value is out of control.”

But critics of the proposal say its passage would help homeowners at the expense of other Floridians.

The Florida League of Cities raised concerns about the proposal during this year’s legislative session. Casey Cook, chief of legislative affairs for the League of Cities, said business owners, renters and local governments will take a hit if Amendment 5 passes.

“Another way to put it is that one person’s tax cut is another person’s tax increase, and we think that homeowners already have a really good deal in the state of Florida,” said Cook in an interview with the Miami Herald.

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How would the amendment work?

In Florida, properties are taxed using a formula that factors in a property’s value and different tax rates — or “millage rates” — assessed by local governments, like cities, counties and school boards.

It works like this: A home with a taxable value of $100,000 and a combined millage rate of $5 for every $1,000 of property value would pay a $500 property tax bill.

But not all properties are created equal.

Floridians who own their home and declare it as their permanent residency – known as homestead property owners – are eligible for a discount.

There are two exemptions that each knock $25,000 off the taxable value of a home, thereby reducing the final tax bill. For example, a home with an assessed value of $200,000 and two homestead exemptions worth $50,000 would be taxed at a value of $150,000.

However, were Amendment 5 to pass, the value of the second of the two exemptions – which does not affect taxes paid to schools – would be adjusted annually to increase at the rate of inflation.

For example, if the rate of inflation is at 8%, it would increase the value of the exemption from $25,000 to $27,000.

The adjustment would be based on the percent change in the Consumer Price Index for All Urban Consumers, for U.S City Average.

If Amendment 5 passes, it will go into effect in 2025.

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The Pros

Garcia said she hopes to see residents vote in favor of the proposal given that property values continue to sky-rocket in the state for homeowners like herself. She said Amendment 5 will give them more relief and will help residents to be able to continue to live in their homes.

“I’m not selling, I’m not moving. I just want to stay in my home and continue to live there until I die, but because of what’s happening around me, the property value is going up. So every year instead of my tax remaining flat, it goes up,” said Garcia.

She said specifically in Miami, she believes residents will have a big benefit given how over the past few years so many people have moved to the area, creating property value increases.

“We need to have taxes under control so that people can continue to live in Miami-Dade County, even though this is a statewide initiative. Miami-Dade County is like New York now and taxes in New York are out of control. You have to be able to rein in your government,” said Garcia

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The Cons

Critics of the amendment have raised concerns that it would financially undercut local governments and force more of the local tax burden onto property owners who don’t have homestead exemptions.

While the state’s government relies on sales taxes, local governments in Florida rely heavily on property taxes for their revenue in order to pay for services like police and parks.

A state analysis found that local governments, excluding school districts, could lose more than $111 million annually by 2028 if amendment 5 is adopted.

“This bill becomes a major deal for local governments,” said Cook, from the League of Cities. “When there’s less revenue coming in, it means you’re going to have to make hard decisions. They’re going to have to cut services or you’re going to have to raise millage rates or raise taxes to provide those services that residents expect.”

Cook said that another concern with the amendment is that the financial burden will be pushed onto renters due to another homestead exemption benefit.

While the assessed value of homesteaded properties can only increase at most 3% each year, the value of businesses and apartment complexes can increase as much as 10% per year. As homeowners contribute less to a local government’s tax base, landlords would most likely need to increase their rents to offset their increased property taxes, Cook said.

“If I own a rental property, and my property taxes go up, that’s just a pass through to my renters. If the property taxes increase each year, I’m going to increase the rent for my tenants to make sure I still make the same amount that I did the year before, maybe a little bit more,” said Cook. “So it’s a complete pass through to the renter. They’re the ones that receive no benefit. If anything, their rent goes up to cover the cost of those property tax increases.”