Florida's High Taxes

[BobKamman]

New homeowners in Florida are finding that life in a state with no income tax can mean life in a state with high property taxes. Florida has a law similar to California’s Prop 13, that limits annual property tax increases to 3% (or CPI increase, if less) but starts the valuation anew when the property is sold. That can triple the taxes for the new owner.

https://www.businessinsider.com/florida-homebuyers-shocked-by-skyrocketing-property-taxes-2022-11

I have seen this happen with Arizona taxpayers moving to Texas. Arizona, until recent years, has had fairly high income-tax rates, but low property taxes. Upper-middle-class taxpayers would pay maybe $4,000 combined income and property taxes. Moving to Texas, they would pay that much or more, just in property taxes.

[qbteachmt]

Make sure they submit for the Homestead exemption, if that applies.

[MMtaxMM]

Real world example with a HNW individual and spouse relocating from IL to FL in 2021. This is with the homestead exemption.

IL residence custom built in 1987 and sold in 2021 for $749k. Last property tax bill was just over $24k because the property assessment was out of whack by several hundred thousand. Bought house in N Naples which was appraised at $2.97 million in 2021 and $3.06 million in 2022. Property tax was $32k in 2021 and $31.7k in 2022. The guy saved, by my estimation, $30-40k in IL income tax (he's an FC with a ton of HNW clients in FL). So there's that.

Personally, I sold a commercial building in IL last year and got slapped with a ~15K tax bill which was all depreciation recapture (fully depreciated from 1989 which reduced basis to $0). The dumb thing had hardly appreciated in all those years.

I've got tons of other examples that contradict that article but I'll spare everyone.

[IRonMaN]

But, when was the last time a hurricane hit IL?

[BobKamman]

@IRonMaN There should be trigger warnings here.  That brought back memories of my first winter in Chicago, coming from sunny Arizona, and the Great Storm of 1967.  

[MMtaxMM]

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@IRonMaN wrote:

But, when was the last time a hurricane hit IL?

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There were snowcanes and freezing cold temps every year that I lived there. I'll take the occasional hurricane over that nonsense any day, but that's just me.

[MMtaxMM]

@BobKamman wrote:

That brought back memories of my first winter in Chicago, coming from sunny Arizona, and the Great Storm of 1967.  

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Yeah, and those are fun only when you're a kid. 

[IRonMaN]

I was taking my dog out for a walk Wednesday night after part one of a two part snowstorm in Minnesota.  I stopped and clicked a pic of the lighted Christmas tree in our front yard.  For some strange reason, this was more peaceful to look at than watching a hurricane battering the front window of my house, but that's just me

[MMtaxMM]

Not sure if you're aware, but you might be surprised at how little damage there was to well-built, concrete block/stucco homes with tile roofs, that are just a few miles inland (not on a barrier island, a canal or river). We had mostly downed palm fronds and that was about it. 

My neighbor said he could hardly hear the storm, this was Ian BTW, when he was in his den. We also had electric, internet, cable, landline throughout and lost power for about a day when the storm ended. So, no "battering" and the whole thing was over within about 8-9 hours......and that was a long one while the snow and freezing temps hang around for months.

[qbteachmt]

"but you might be surprised at how little damage there was to well-built, concrete block/stucco homes with tile roofs, that are just a few miles inland"

Yep. My stepfather, who just died, owned his since the mid-1960s. And that house also is 30' above sea level, so it's not even a flood-rated area. They are often the only house on the block with power throughout a storm.

We've been interviewing listing realtors and they are all drooling over it. I figure it will sell quickly.

[MMtaxMM]

"And that house also is 30' above sea level, so it's not even a flood-rated area."

Exactly, and it depends on the precise location. We're not even 10' above SL but we don't flood (Zone D). 2 weeks before Irma we got 20" of rain over the weekend and then another 20" with Irma (2017). The street in front of my house had maybe a couple inches of water (like about ankle-deep or so) and that drained away quickly, With Ian, we just had wet streets.

BTW, I think it should go without saying that you're only going to see the most devastated areas on TV or the internet. The media has no interest in showing you areas that are basically undamaged.

[BobKamman]

And of course, who cares about the people who can't afford block homes with tile roofs, inland?  Just because you depend on them for essential services, doesn't mean that out of sight can't be out of mind.

[MMtaxMM]

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@BobKamman wrote:

And of course, who cares about the people who can't afford block homes with tile roofs, inland?  Just because you depend on them for essential services, doesn't mean that out of sight can't be out of mind.

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Uh, a LOT of those people are also just fine because they do live inland and in areas that are not prone to surge. Concrete block is only expensive when compared to something like a mobile home and you don't need a tile roof either.....most shingle (and metal) roofs inland had little or no damage.

On the other hand, there are a LOT of 7 and even 8 figure homes that were damaged and some severely, Those are owned by folks called "rich people" and most of them are not those who are providing "essential services". 

[IRonMaN]

"BTW, I think it should go without saying that you're only going to see the most devastated areas on TV or the internet. The media has no interest in showing you areas that are basically undamaged"

I just don't understand why the news would want to show areas that are 20 feet underwater and homes that are no longer standing rather than showing you folks out with your bottle of Windex washing your windows after the storm. 

[MMtaxMM]

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@IRonMaN wrote:

I just don't understand why the news would want to show areas that are 20 feet underwater and homes that are no longer standing rather than showing you folks out with your bottle of Windex washing your windows after the storm. 

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Well, yeah, but you know what? Some people really don't get it, like an old family friend in IL who emailed my wife telling her that we could stay at her house until ours was rebuilt or repaired, clearly assuming our place had been completely trashed. She wasn't the only one who reached out either based solely on what they we seeing on the news.

[BobKamman]

Send not for whom the bell hurricane siren tolls -- if you can hear it, it's for someone else.  

[qbteachmt]

Block homes were affordable in the 1960s for the returning veteran under the GI Bill whose wife needed to raise his 6 kids nearly alone while Dad worked for the Air Force and the Post Office and delivered soft drinks on a route, as well. That house would sell for twice as much if it was in my area, and more since it has a pool; so, I don't cry for them much. Their property taxes aren't bad. It's the property insurance that's criminal.

I stopped at a Goodwill to buy an "adult sippy cup" (plastic tumbler with lid and straw) to carry around in the car, and pointed out it should not cost more than $1.99. I forgot about sales taxes, so it cost $2.17. Now in MT, that would be criminal.

Taxes are something we all pay, one way or five other ways.

[sjrcpa]

But it was nice of them to offer.

[MMtaxMM]

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@sjrcpa wrote:

But it was nice of them to offer.

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Yessir.....can't argue with that.