Florida Homes and Properties

Archive for the ‘Finance’ Category

The unending creativity of different groups trying to find a solution for the Property Taxes problem in Florida is starting to overwhelm and confuse most of us. Let’s try to understand:

A) First we had the Florida Legislature rolling back property taxes (to their 2006 level!). However they left the door open for cities to override the rollback by a two third majority vote, which was actually done by a few of them.
Then they put on the January 2008 ballot a package of tax relief which included raising the homestead exemption to 75% of the first $ 200,000 of property value, then 15% on the next$ 300,000. Beneficiaries of “save our homes” would lose that benefit if they opted for the homestead exemption increase. We called that “the poison pill”.

B) On October 29, after a judge had thrown out the ballot package, due to its confusing language, and weeks of indecision, the Legislature finally approved a new ballot proposal which consists of:

- Increasing the homestead exemption by $ 25,000, not applicable to school taxes, which would reduce it to a total of $ 40,000 approximately, instead of the present $25,000 exemption? The savings would amount to an average of $ 220 per year said the legislature.

- Establishing the ‘portability’ of the ’save our homes’ protection, up to $ 500,000

- Putting a cap of 10% on yearly increases of assessed value of non homestead and commercial properties.
We called this proposal: the ‘drop like a pebble’.

C) At the end of November 2007, a coalition of different groups was starting to collect the 611,000 signatures needed to put a new tax reform project on November 2008 ballot.
The new proposal consists mainly of imposing a property tax limit of 1.35% per year on the taxable value of on all properties, including non-homestead and commercial real estate.
It would keep the ’save our home’ protection. The sponsors claimed that it would reduce the average tax bill by 26%.
In this proposal, no mention of ‘portability’ of the ’save our homes’. No protection against violent raises of property value like those who hit us between 2000 and 2005.
The sponsors called it: ‘cut property taxes now’ and any owner can add his signature on their website.

D) A new initiative is pending review from the Taxation and Budget Reform Commission.
It would eliminate all Florida school taxes and replace them by expanding the Florida sales taxes to include services.

The background of all these proposals is the general opposition of public employees, and local governments to anything that would have any meaningful impact on their spending.
They are actively campaigning with their eternal threats of crippling education and schools, cutting back on police department, ambulances, and fire departments.

I am not impressed. And I will not buy into their menaces. Florida budget has bubbled to levels we wouldn’t have dreamed about a few years ago. At the same time property tax collections have doubled during the last five years, from about 16 billion to more than 30 billion. So what are these complaints all about when we try to roll back a couple of billions for the sake of our state and our people’s economy?

It’s about the ever-increasing public sector, with its dozens of cities, bureaucracies, police and fire departments, mayors and commissioners, which is a luxury that we can’t afford when our education is at the bottom level in the US, our public health problems have not been seriously addressed, and so many people are in the danger of loosing their homes on the wake of sky-high taxes, insurance premiums and mortgages.

One of the main issues that worry them are the retirement pensions of this new-formed social class. These pensions are steadily guzzling their budgets and there are starting to feel the fear of loosing these benefits that are negated to many Floridians.
We will always affirm workers’ right to secure their retirement. How could we negate the importance of good police and fire departments? But everything must be done within the reasonable and the possible.

That is the reason why we should address the problem in its deep root. Uncontrolled spending must be stopped and rolled back. Efficiency must be the rule and not the exception. And our local government, as well as our State government must abide by the same belt-tightening measures that it has forced onto a majority of our population.

One of the first steps, in my modest opinion, is the regrouping of city services, and the undoing of this hundred-head bureaucracy that we don’t need.

The exercise of swapping and juggling with tax revenues is proving to be a vain purpose. We have to modify our Tax Property system to make it more equitable; encouraging first time buyers, investors and out-of-state buyers, instead of chasing them away. This won’t be accomplished without reducing our government expenses to acceptable levels.

We definitely need a reform. We do not need a temporary patch. A big part of Florida’s future depends on what is done now. All parties should agree on this basic fact and work to reach a real solution.

If you are a landlord or property manager, knowing your rental property tax deductions is vital for cutting your taxes to the minimum. Find out how to enjoy lower landlord taxes and boost your profit margins right now. Rental property tax deductions are basically rental expenses that you are allowed to deduct when calculating your taxes. They are crucial because they will reduce your total amount of taxable income.

To cut down your landlord taxes, you can should to include as many tax deductions that you are allowed to use. The following are the common and important deductions that you can enjoy as a landlord:

1. The Depreciation Value of Your Property

When you buy a new rental home, you cannot claim the full amount that you paid for it as expenses right away. Instead your property is slowly depreciated over a long period of time.

Depending on the country that you live in, most depreciation periods for residential property range from 20 to 30 years. Home owners are usually not allowed to claim depreciation as tax deductions so you will not be able to apply this to your own home.

2. The Premiums for Your Landlord Insurance

Being a landlord means that you will usually have to buy a series of insurance polices such as building insurance, home contents insurance and landlord liability insurance.

You will be able to treat the premiums that you fork out for all your landlord insurance policies as tax deductions. If you employ people to manage your rental real estate, you will be able to claim the premium for their worker insurance as rental property tax deductions as well.

3. Interest on Your Mortgage and Credit Cards

Unless you are awfully rich, you would have taken out a mortgage loan to pay for your property investment. Fortunately you are allowed to deduct this sizable interest charged by your bank or mortgage lender.

If you pay for any of your rental expenses by credit card, you will also be allowed to deduct the relevant credit card interest from your total taxable income.

4. Your Property Repair and Maintenance Bills

The money that you fork out to maintain your rental home in habitable condition is also tax deductible. This refers to any repairs or maintenance that are conducted to make sure that it meets your local health and safety housing standards.

However you must know that any home improvements that you carry out for the purpose of boosting the values of your real estate cannot be considered as a deduction. If you hire a contractor or repairman for repairs, make sure you ask them to give you a receipt with the property costs and type of repair work stated on it.

5. Travelling Costs for Managing Your Real Estate

Any travelling expenses that you rake up for rental activities such as rent collection and property repairs are also tax deductible. You are usually allowed to deduct both your gasoline costs and vehicle’s maintenance bills. If you own rental properties abroad and you travel overseas for real estate activities, you may even to claim your airplane tickets, hotel stays and travelling fares as rental property tax deductions.

The tax agencies in most countries will monitor your tax claims for overseas travel quite closely so be sure not to abuse the system and keep proper written records of your spending such as receipts and bills.