Florida Property Tax Update Archive

UPDATED march 2024

Live Local: Property Tax Exemption for the “Missing Middle”

A new property tax exemption signed into law in March 2023 has garnered significant attention from multifamily developers. The property tax exemption is referred to colloquially as the “Missing Middle” property tax exemption because its aim is to encourage development of workforce housing to serve people with incomes above those served by traditional affordable housing, but still priced out of the very high rental market.

The exemption has two levels. There is a 100% exemption for units rented to tenants whose income is at or below 80% of the area median income, commonly known as AMI, and a 75% exemption for units rented to tenants whose income is between 80% and 120% AMI. To qualify for the exemption, multifamily projects must have at least 71 units meeting the restrictions and must have been built within the past five years. Rents must be the lesser of 90% of market rent for the area in question or the rental limits prescribed by HUD annually. Counties administer the exemption on a unit-by-unit basis, but the proportionate value of the land and common elements are also exempt.

The law passed in 2023 and first applies to the 2024 tax year.  With such a quick roll-out, many details remain to be worked out and changes were already made in the 2024 legislative session.  For example, a  new bill passed in March 2024 allowing  counties to opt out of the 75% exemption if the number of available units catering to tenants at or below 120% AMI exceeds the number of households in the county at or below 120% AMI.   Changes and clarification will certainly continue to be made as this exemption is first applied this year.

Julie Schwartz and Daniel Wolfe
Rennert Vogel Mander & Rodriguez, P.A.
American Property Tax Counsel (APTC)

UPDATED december 2023

Transferring a Property to an LLC? Think Twice Before Doing So!

In Florida, property tax assessments cannot increase more than 10% annually, except for the school board part of the tax rate.  Upon a “change of ownership or control” of the property, however, the 10% assessment limitation cap is removed and the assessed value resets to market value. In defining a “change of ownership or control” the statute excludes conveyances that merely transfer title between legal and equitable title.

A recent Third District Court of Appeal case addressed whether a transfer from individuals to an LLC, wholly owned by those same individuals and where no monetary consideration was exchanged, constitutes a “change of ownership or control” which requires removal  of the 10% assessment limitation cap or if it falls withing the exception for a transfer between legal and equitable title, allowing the cap to remain in place. 

The court held that the transfer was a change of ownership or control because the LLC is a distinct and separate entity from its individual members. The court mentioned that the point of the transfer was to separate the individuals from their ownership of the property to absolve them of tort liability for occurrences on the property. Finally, the quitclaim deed employed to transfer the property from the individuals to the LLC, by law divested the individuals of any interest in the deeded property with such interest vesting in the LLC. Thus, as a result, the 10% assessment limitation cap was removed, resulting in a sizable tax increase.

Dan Wolfe and Julie Schwartz
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

UPDATED june 2023

Florida’s New “Live Local Act” Creates New Property Tax Exemptions For Affordable Housing

The Florida legislature passed sweeping reform encouraging development of more affordable housing.  One aspect of the bill is the creation of new property tax exemptions for affordable housing.  The Live Local Act, which takes effect in July 2023 (but won’t apply until the 2024 tax year with regard to the tax exemptions), creates three new exemptions for affordable housing.  There is a new exemption of either 75% or 100% of the assessed value, for affordable housing completed within the past 5 years, that has at least 71 units, and does not receive Federal Income Tax Credits.  If tenants are at 80% AMI or below, there is a full 100% exemption.  If tenants are between 80% and 120% AMI, the exemption is 75% of the assessed value.  The bill also empowers cities and counties to authorize their own exemptions for lower income tenants, earning up to 60% AMI. These local exemptions can be applied to older properties with at least 50 units.  The third exemption is for land owned by a non-profit that is leased for affordable housing.  These exemptions provide a powerful incentive to developers and landowners to build more affordable housing units in Florida.

Julie M. Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

UPDATED december 2022

Good Faith Payment Required to Appeal Property Taxes In Circuit Court

In Florida, the vast majority of property tax disputes are resolved at the Value Adjustment Board, known as the VAB. In some cases, however, either because the VAB deadline was missed, or when either the taxpayer or County Property Appraiser appeals a VAB decision, a tax case can be heard in circuit court.

In addition to meeting the strict deadlines for the timing of the appeal, taxpayers filing in circuit court  must make at least a good faith payment of the amount of taxes they admit to be owing.  Payment of the tax is not deemed an admission that the tax was due.

Tax contests in circuit court often take years to resolve. During that time, good faith payments must be made for all subsequent tax years as well. Failure to do so constitutes grounds for dismissal of the lawsuit.

What is required of a property owner who sues seeking a full exemption, such as a religious institution, a charitable organization or a school?  The basis of their claim is that no taxes are due.  However, the case of Sowell v. Faith Christian Family Church of Panama City, 249 So.3d 1323 (Fla. 1st DCA 2018) implies that some amount must be paid even by a property owner seeking a full exemption.

The court writes that, “It is well established that a challenge concerning entitlement to a tax exemption is a challenge to an assessment of taxes, for purposes of section 194.171.” Although not discussed explicitly by the court in Sowell, the implication of the case is noteworthy with respect to a taxpayer arguing for full tax-exempt status and making a good faith payment. In theory, a taxpayer such as a church that is arguing for full tax-exempt status would argue that no good faith payment is necessary because no amount of taxes is admitted to be due and owing. However, the court in Sowell still required the taxpayer church to make some form of good faith payment and ultimately dismissed the lawsuit for its failure to do so.

Julie Schwartz and Dan Wolfe
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

UPDATED SEPTEMBER 2022

Palm Beach VAB in Favor of Uniform Cost of Sale Deductions

The Palm Beach County Value Adjustment Board (“VAB”) held a public workshop on June 28, 2022 to discuss whether special magistrates should apply a cost-of-sale deduction “across the board” in VAB hearings. The impetus for the workshop was the recently appointed Palm Beach County VAB attorney taking the position that cost-of-sale deductions should not be applied universally and moreover that while cost-of-sale deductions are appropriate during appraisal development (i.e., when the property appraiser is assessing all properties using its computer assisted mass appraisal process), it is inappropriate to apply a standardized cost-of-sale deduction for a single property appraisal at the VAB.

By way of background, the “cost-of-sale” adjustment refers to one of the eight statutory factors that are to be considered for arriving at just value for Florida property tax assessment purposes. Specifically, it requires the deduction of the usual and reasonable fees and costs of the sale (including costs of financing and allowance for unconventional terms of financing arrangements). Importantly, Florida case law requires the cost of sale adjustment to be considered regardless of whether an actual sale of the subject property occurred. Every county in Florida, but one, applies a systematic  cost-of-sale adjustment during appraisal development.

Several agents, including our firm, attended the workshop in support of a universal cost-of-sale adjustment. We argued that the cost-of-sale adjustment is a professionally accepted appraisal practice that, by law, must be applied by the property appraiser as well as the VAB at hearings. Moreover, the legislature’s primary goal of uniformity in assessments would be compromised if the cost-of-sale adjustment was not applied systematically.

The Palm Beach County VAB agreed and stated that it would instruct the special magistrates to apply a systematic cost-of-sale adjustment equal to the amount applied in appraisal development and reported on the annual DR-493 for all properties at hearings.

Dan Wolfe
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

UPDATED june 2022

Can You Sue the VAB? The Third DCA Says No

An individual taxpayer sued the Miami-Dade County Value Adjustment Board (“VAB”), arguing that the VAB violated his procedural due process rights in reviewing his 2019 and 2020 value petitions by, among other things, using false evidence to justify VAB decisions. The lower court dismissed the complaint, not on the merits, but because the VAB, as a quasi-judicial entity, is immune from suit regardless of whether the claim alleges a procedural due process violation.

The Third District Court of Appeal affirmed, finding that the VAB is not a proper party to a suit brought by a taxpayer challenging a property assessment or procedural or constitutional violation. The Third DCA relied on the Florida Statutes, which identify the proper parties to “any tax suit.” The proper parties are the taxpayer and the property appraiser, not the VAB. Moreover, the Statutes make clear that only the property appraiser can bring suit against the VAB (subject to certain procedural steps first being met including a probable cause determination by the Department of Revenue).

Finally, the Court likened the VAB to other quasi-judicial bodies immune from lawsuits (clerk of court, hearing officer, parole commission, state attorney). The test for whether judicial immunity exists, is whether (1) the ruling in question was a judicial act, and (2) there was jurisdiction to issue the ruling. As it pertains to the VAB, the Court found that both prongs were met.

Case citation: Johansson v. Miami-Dade Cnty. Value Adjustment Bd., No. 3D21-2170, 2022 WL 1395526 (Fla. 3d DCA, May 4, 2022)

Daniel Wolfe, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

UPDATED march 2022

For Public Golf Courses, Profits Equal Taxes

The City of Gulf Breeze previously enjoyed tax exempt status on its municipal golf course. The City hired a third-party operator because it was losing money operating the golf course. Following the hiring of the third-party operator, the Property Appraiser denied the municipal tax exemption. The First District Court of Appeals agreed with the Property Appraiser’s decision to deny the exemption because although the City remained the owner of the land and even though public golf courses can be exempt under the rationale that providing recreational activities constitutes a public purpose, in this case the third-party operator was entitled to the profits generated by the operation of the property and also bore the risk of any financial losses. For these reasons the court determined that the golf course was not used exclusively for a municipal or public purpose. The court distinguished the present case from another similar case where it was determined that employing a third-party management company did not jeopardize the property’s tax exempt status. The critical distinction in that case was that the third-party operator was simply paid a contractual management fee as opposed to the Gulf Breeze case where the operator was entitled to any profits generated by the course.

Case Citation: Brown v. City of Gulf Breeze, No. 1D19-4245, 2022 WL 610533 (Fla. 1st DCA Mar. 2, 2022)

Daniel Wolfe, Esq.
Rennert Vpgel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

UPDATED september 2021

Florida Supreme Court Limits Property Appraisers’ Ability to Back Assess

Florida law allows county property appraisers to back assess property for a maximum of three years when property is deemed to have “escaped taxation”.  Over time and interpretation by the courts, this was generally applied such that an appraiser could not use back assessments to increase a prior year’s taxes to correct a mistake of appraisal judgment. However, courts had allowed corrections of clerical errors or similar mistakes that led to an undervaluation of property.   In its recent ruling, however, the Supreme Court held that the clerical error/judgment distinction is not in the statutes and that appraisers can not back assess for either type of mistake.  They can only back assess when property truly “escapes taxation”, meaning that it was not taxed at all.  The dissenting justices raised concerns of fairness and a windfall to a taxpayer who benefits from a clerical error. The majority opinion, however relied on the unambiguous language of the statutes and also favors an important principle that taxpayers need finality and certainty in taxation.

Julie Schwartz
Rennert Vogel Mandler & Rodriguez, PA
American Property Tax Counsel (APTC)

UPDATED june 2021

100% Property Tax Exemption for Certain Low Income Housing Tax Credit Properties

A new Florida law increases the 50% exemption for certain older low-income housing tax credit (“LIHTC”) properties to a 100% exemption beginning in the 2022 tax year.  Tax exemptions for LIHTC properties have changed often in recent years.  LIHTC properties are financed through the issuance of tax credits and in exchange, the owners agree to restrict the property for a number of years to rent only to tenants that are below certain income thresholds and to charge rent in accordance with the HUD guidelines.

From 2009 through 2013, LIHTC properties were fully exempt. Then in 2013 that exemption was removed and they became taxable, although the restricted rents had to be recognized by the county property appraisers in valuation of the property for tax purposes.  In 2018, the Florida legislature passed a law granting a 50% “discount” or exemption to LIHTC properties after their 15th year of operation, provided that they have at least 70 units. Starting next year, these older LIHTC properties will be entitled to a full 100% exemption.  This change represents a growing recognition that there is a need for more affordable housing.

Julie Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

UPDATED june 2020

Higher Property Tax Bills in November Won’t Reflect Current Reality for Commercial Property Owners

Although property tax bills for 2020 don’t come out until November, and the preliminary notices of assessment will not be mailed to owners until August, County Property Appraisers have finished setting 2020 assessment values and submitted their tax rolls to the Department of Revenue for final approval.  Unfortunately, most Property Appraiser’s Offices which we have contacted are taking the position that since the effects of COVID happened after January 1st, and Florida’s lien date is January 1st, they do not need to recognize the economic downturn which has impacted most sections of the economy.

In Miami-Dade County, the total tax roll is up 2% before factoring in new construction. With new construction, which was highest in Miami, Miami Beach, and unincorporated Miami-Dade County, the total tax roll is up 4.6%.  In Broward County, the total tax roll including new construction is up 6.1%, and in Palm Beach County it is up 5.5%.

In order for owners to obtain relief in 2020, it will be necessary to be proactive with appeals.  For those properties which were already hurting before COVID, the appeal must identify the forces which negatively impacted these businesses prior to COVID.  For other property types, it will be necessary to relate back the early reports of the pandemic to the lien date.  Appeals will require an individualized approach to challenging property values in 2020.

Julie Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

UPDATED march 2020

Effects of COVID-19 on Property Taxes in South Florida

COVID-19, with social distancing, stay at home orders, and remote working, have affected ad valorem property tax administration in South Florida just like every other aspect of life.

The deadline to pay 2019 ad valorem property taxes was extended in all Florida counties from March 31st to April 15th. Payments must be submitted electronically or postmarked by April 15th.

Both the Miami-Dade and Broward County Property Appraiser’s offices continue to operate, but are closed to the public.  They are available via phone and email.

Value Adjustment Board hearings concerning 2019 property taxes continue but are being conducted exclusively by phone.  The majority of hearings for 2019 property taxes were completed before the crisis and the remainder should be finished by the end of April.

Homestead and other exemption applications for the 2020 tax year were due March 2, 2020. If that deadline was missed, late applications may be filed through mid-September with a showing of extenuating circumstances for filing late. The Property Appraiser’s offices have indicated that they will be accepting late applications due to the COVID-19 emergency.

Miami-Dade and Broward Counties are treating personal property tax returns as late if an extension request was not submitted by April 1st.  However penalties for late filing increase monthly, so if a return has not already been filed, it should be submitted by April 30th to avoid further penalties.

Lastly, in Florida, valuations are based on a January 1st lien date. We are concerned that County Property Appraisers may take the position that 2020 values pre-dated the COVID-19 crisis and there will not be sufficient relief granted.  It will be particularly important to review and contest 2020 property tax assessments, to demonstrate that all types of commercial real estate have been affected by the economic impacts of the pandemic.

Julie M. Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez P.A.
American Property Tax Counsel (APTC)

UPDATED december 2019

The Final Word on Tax Exemptions

A recent appellant case addressed the issue of whether administrative finality attaches to Value Adjustment Board (“VAB”) hearings. The case involved the denial of an educational exemption to a taxpayer. The taxpayer appealed the denial to the VAB, which ultimately granted the exemption in 2008. The Property Appraiser (“PA”) did not appeal the VAB decision and taxpayer received the exemption for the next five years. In 2014, the PA denied the exemption even though there was no change in the law or factual circumstances. Taxpayer argued the 2008 VAB decision was binding based on the doctrine of administrative finality, which bars re-litigation of an issue absent changed circumstances. On re-hearing en banc, the appeals court held that administrative finality does not attach to VAB decisions. The court reasoned that circuit courts have exclusive original jurisdiction in all tax cases, and the VAB only acts as an informal taxation dispute mechanism. Administrative finality requires either (i) going directly to circuit court or (ii) filing suit in circuit court for de novo review of an issue previously presented to the VAB.

Crapo v. Acad. for Five Element Acupuncture, Inc., 278 So. 3d 113 (Fla. 1st DCA 2019)

Daniel Wolfe Esq.
Rennert Vogel Mandler & Rodriquez, P.A.
American Property Tax Counsel (APTC)

UPDATED september 2019

Property Appraiser has Burden of Complying with Professionally Accepted Appraisal Practices

In an action challenging the assessment of TPP, a Florida Court recently ruled that the property appraiser was statutorily required to present evidence that it calculated obsolescence of the TPP in accordance with professionally accepted appraisal practices.

At trial, taxpayer did not dispute that property appraiser could assess TPP based on the cost approach. The Court found that the property appraiser provided sufficient evidence that he determined the reproduction cost of the TPP as well as the effect of deterioration in accordance with professionally accepted appraisal practices.

However, the property appraiser had the additional burden of showing that he determined obsolescence of the TTP in accordance with professionally accepted appraisal practices. The court determined that the property appraiser failed to meet this burden because he did not present testimony that his methodology complied with professionally accepted appraisal practices, and taxpayer’s expert testified that the property appraiser failed to sufficiently examine comparable sales in determining obsolescence in violation of professionally accepted appraisal practices.

Case citation:  Darden Restaurants, Inc. v. Singh, 266 So. 3d 228 (Fla. 5th DCA 2019)

Daniel Wolfe Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

UPDATED JUNE 2019

A Charitable Purpose May Be Broader Than You Think

A Florida court recently ruled that a charitable purpose does not have to be a benevolent purpose to qualify for a tax exemption under the Florida Statutes. In so ruling, the court reinforced a basic tenet that the property appraiser may not extend, modify or limit an unambiguous statute.

The issue before the court arose when the Alachua County property appraiser denied the Gainesville Area Chamber of Commerce a tax exemption from ad valorem taxation. The Chamber argued that it was entitled to the exemption under the Florida Statutes, which exempts property used predominantly for charitable purposes from taxation.

According to the Florida Statutes, a charitable purpose means a function or service which is of such a community service that its discontinuance could legally result in the allocation of public funds for the continuance of the function or service. The property appraiser argued that tax exemptions for charitable purposes must be limited to benevolent purposes, such as providing material assistance to the needy. The property appraiser further argued that the Chamber’s stated purpose of promotion of business and economic development was not traditionally understood as a charitable activity and not inherently benevolent. The court disagreed with the property appraiser’s position, finding that the statutes are unambiguous and do not limit the exemption to “benevolent” purposes. The court reasoned that because legal public funds could be allocated for the Chamber’s stated purpose (and in fact had been in the past), that was sufficient to entitle the Chamber to the tax exemption.

Daniel Wolfe Esq.
Rennert Vogel Mandler & Rodriguez P.A.
American Property Tax Counsel (APTC)

UPDATED september 2018

In Property Tax Assessment, Every Year Stands on its Own – Except When it Doesn’t

A recent appellate case held that the doctrine of “decisional finality” applies to tax exemption matters and that there must be a terminal point in proceedings at which the parties may rely on a decision as being final and dispositive of the rights and issues involved.  In the case, the property appraiser (“PA”) denied an educational exemption and the taxpayer appealed to the Value Adjustment Board (“VAB”), which granted it.  The PA did not appeal the 2008 VAB decision and the school received exemption for the next five years. In 2014, however, with no change in the law or factual circumstances, the PA sought to revisit the matter, denying the exemption. The taxpayer argued the doctrine of administrative finality bars re-litigation of the exemption issue absent changed circumstances.  The court agreed and wrote that expanding the already broad authority of property appraisers by authorizing administrative challenges to previously granted tax exemptions serves no cognizable purpose where factual and legal underpinnings of an exemption remain the same.

Julie Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

UPDATED june 2018

Court Holds that Miami-Dade County Must Repay Interest to Taxpayers

For tax years 2011 through 2016 the Miami-Dade County Tax Collector was required to pay interest on certain refunds issued to taxpayers as a result of Value Adjustment Board appeals.  During this time period, the tax collector reversed course and took the position that if a taxpayer settled their case they were not entitled to interest on their refund. Based on this position, the tax collector stopped issuing interest to taxpayers who were entitled to it, and demanded repayment of interest that had already been paid.  Our firm recently prevailed in the appellate court on behalf of a representative group of taxpayers challenging the tax collector’s position.  The Court agreed with our interpretation of the statute, that interest must be paid by the county on an overpayment whether the assessment is reduced by agreement or at a hearing.  Our firm will now return to the trial court to certify the class of affected taxpayers and seek recovery of the interest payments due to them.

Julie Schwartz Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

UPDATED March 2018

Assessment of "Vertical Subdivisions"

A new law in Florida addresses a longstanding issue regarding taxation of mixed use high rise properties often referred to as vertical subdivisions.  Many recent real estate developments are created with “lots” in the sky with distinct ownership of each component. Even if these vertical lots are owned by separate owners, county property appraisers in Florida were not required to issue separate tax folio numbers. This created issues related to allocation of the taxes among different owners and the lien of taxes that would be imposed if the owner of one component failed to pay its share of the total tax bill.  Beginning with the 2018 tax roll, the new law requires property appraisers to issue separate tax folios for each “parcel” of a multi-parcel building which is identified in a recorded instrument.  It also specifies that the land underlying the multiple parcel building may not be separately assessed, but rather must be allocated to each parcel in proportion to the just value of all the parcels.  This is similar to the way  condominium units are currently assessed in Florida.  The statute also recognizes that some or all of the parcels in a multiple parcel building can be further subdivided into condominium units.  This new law will resolve allocation and lien issues but will present interesting valuation challenges for vertical lot owners.

Juie M. Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez P.A.
American Property Tax Counsel (APTC)

UPDATED December 2017

10% Cap on Commercial Tax Assessment Increases

It is important to review the capped assessed value of your commercial property each year to ensure it does not improperly exceed the permitted 10% increase.  Recently, we have seen examples of county property appraisers aggressively interpreting when an increase in excess of the 10% cap is allowed.  Many property appraisers are treating interior buildout or tenant improvements as new construction and adding the value of these tenant improvements to capped values.  While the value of new construction may be added above the 10% cap, the property appraiser may not exceed the 10% cap for construction which is a repair or replacement.  On the other end of the spectrum, if a “qualifying improvement” increases the value of a property more than 25%, a complete re-set of the cap is permitted.  In order to avoid these increases, property owners must demonstrate that the buildout is a repair or replacement, such as tenant improvements which are necessary to retain the value of the property by re-letting the space.  

Julie Schwartz, Esq..
Rennert Vogel Mangler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

UPDATED SEPTEMBER 2017

How Will Hurricane Damage Affect Real Property Taxes?

In the wake of Hurricane Irma’s trek through almost the entire state of Florida, taxpayers may wonder how storm damage to their buildings will impact property tax bills issued in November.  Because each year’s property taxes are based on conditions as of January 1st, a loss from Hurricane Irma would generally not change the 2017 tax bill. Beginning in 2018, however, county property appraisers should reduce or remove building values to reflect damage and loss in value. If damage is so extensive that a property is deemed “not substantially complete” as of January 1, 2018, the entire improvement value should be removed from the tax roll until the building is rehabbed. Florida statutes also provide that changes, additions or improvements which replace all or a portion of property damaged by misfortune or calamity will not increase the property’s assessed value if they are begun within 3 years from the January 1st following the damage and if the completed property does not exceed 110% of the total square footage of the property before the damage.  Furthermore, hurricane repairs made within these parameters should not affect the Save our Homes cap or the 10% cap on annual increases of non-homestead property.

Juie Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez P.A.
American Property Tax Counsel (APTC)

 

UPDATED JULY 2017

50% Property Tax Exemption for Certain Low Income Housing Tax Credit Properties

A new law recently passed in Florida granting approximately 50% exemption to certain aging affordable housing properties financed by Low Income Housing Tax Credits. The law applies to properties after the 15th year of the recorded agreement with Florida Housing Finance Corporation (“FHFC”). To receive the exemption, the property must have more than 70 units used to provide affordable housing to low, very low or extremely low income persons or families and be subject to a recorded agreement with FHFC. The exemption is a 50% discount from ad valorem taxes otherwise owed on the portion of the property used to provide affordable housing to low, very-low or extremely low income households. The law takes effect in 2018 and property owners must apply for the exemption.

Julie Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

 

UPDATED MARCH 2017

City of Miami Enterprise Zone Tax Exemption

In 2001 City of Miami voters approved a referendum permitting certain new and expanding businesses within distressed areas of the city to apply for ad valorem property tax exemptions, renewable for up to 10 years. These areas were identified as “enterprise zones”.  A number of businesses applied for exemptions between 2004 and 2011, but the City did not take action and neither approved or denied the applications. The applicants sued as a class in circuit court.  In response, the City argued to the appellate court that the class claims were barred by the 60 day limit that applies to appeals of current year taxes.  The City argued that the notice of proposed taxes served as a notice of denial.  The court found, however, that the City failed to provide notice of denial as required by the exemption statutes and also failed to comply with the notice of denial procedures in the City ordinances.  Ultimately, the court held that the 60 day non-claim statute did not bar the taxpayers’ appeal.

Julie Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

 

Updated December 2016

City Owned and Operated Marina is Exempt from Property Tax

A private marina owner challenged the ad valorem property tax exemption granted to two marinas owned and operated by the City of Fort Pierce.  The private marina operator alleged that a 2005 Florida Supreme Court case restricted the definition of public purpose and that municipal marinas which had traditionally been exempt should now be taxed. The court held that the law regarding public purpose has not changed and that the city owned and operated marinas remain exempt from taxation. However a separate and more restrictive test applies when a city leases its land to a private party.  If the city owned land is leased to a private marina operator, the court reasoned that it would be taxable.  Although the court ruled that Ft. Pierce’s marinas were properly exempt, it certified a question to the Florida Supreme Court to determine with finality whether a municipally owned and operated marina still qualifies as a traditionally exempt municipal or public purpose.

Julie Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

 

Updated September 2016

Solar and Renewable Energy Source Devices to be Exempt from Property Tax

In August, voters approved an amendment to the Florida Constitution authorizing the legislature to exempt solar and renewable energy source devices from ad valorem taxation.  The amendment also authorizes the legislature to prohibit consideration of solar and renewable energy source devices when valuing real property for ad valorem taxation.  Currently, the value of solar energy and other renewable energy devices are taxed annually as tangible personal property.  The amendment takes effect in January 2018, so taxpayers will begin to see the benefit in their 2018 tax bills. The amendment is expected to encourage the use of renewable energy throughout the Sunshine State.

Julie Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

 

Updated June 2016

60-Day Time Limit For Property Tax Appeals Does Not Apply To Tax Liens For "Claw-Back" Of Taxes

In Florida, the property appraiser may back assess property for 10 years in certain circumstances when it alleges the taxpayer improperly received an exemption or a 10% cap on annual increases. In these situations the property appraiser files a lien on the property seeking repayment of the taxes claimed to be owing plus penalties and interest. These liens cannot be appealed to the value adjustment board so taxpayers must appeal to circuit court. A recent case held this type of appeal is not subject to the 60 day limit that applies to appeals of current year taxes. In this case the property appraiser gave no prior notice before filing the lien. A new law, which takes effect July 1st, now requires 30 days notice before such a lien can be filed. 

Julie Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

 

Updated March 2016

Appeal of Tangible Personal Property Assessment Waived if Return Not Timely Filed

The Florida Legislature just passed a bill limiting taxpayers’ rights to contest assessments of tangible personal property taxes.  Prior to this amendment, the law required that a Tangible Personal Property Tax Return be filed before an assessment could be contested.  The new law, however, requires that the return be “timely filed”, which generally means by April 1st, subject to any extensions that may be granted.  If the return is filed late, by even one day, the Property Appraiser (“PA”) can preclude the taxpayer from filing an administrative appeal to the Value Adjustment Board (“VAB”). 

It is helpful to know that the PA is required to grant a 30 day extension of time to file a return upon written request made at least 10 days before the deadline.  It is also within the PA’s discretion to allow an additional 15 day extension.

The new law also allows the PA to reject a return by mailing a notice informing the taxpayer it believes an incomplete or erroneous return has been filed.  If the PA determines the taxpayer has not submitted a sufficient corrected return within 30 days of the PA’s notice, the taxpayer loses its right to appeal to the VAB. The law appears to grant the PA wide discretion on whether it accepts a return and gives no recourse to dispute this finding by the PA, other than to file an appeal in circuit court. 

Julie Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

 

Updated December 2015

Court Upholds Higher Tax Rate in Miami's Downtown Development Authority

A property owner within the City of Miami’s downtown central business district challenged the City’s authority to assess an additional one-half mill ad valorem tax against property within the central business district. The purpose of the downtown development authority was to plan and propose public improvements of all kinds which may be necessary or appropriate to aid in the economic growth and improvement of the downtown area. The court agreed that the governing body is authorized to levy an addition a one- half mill on all real and personal property in the downtown district to fund these activities. The additional millage is assessed equally to all properties within the district. The court held that the Constitution’s uniformity requirement does not inhibit a taxing authority from levying additional ad valorem taxes, provided they are authorized by the legislature. They concluded by holding that the City was authorized, and continues to be authorized, to levy the additional tax in the downtown development area.

Julie Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

 

Updated September 2015

 Ad Valorem Tax Exemption for Affordable Housing

The law governing tax exemptions for affordable housing was changed mid-year 2013 with a provision that the amended statute was to be applied to the 2013 tax year. Prior to the change, property used for affordable housing was entitled to the exemption, even if owned by a limited partnership with a for-profit limited partner. The change disallowed this ownership structure, limiting the exemption to non-profit owners. A number of taxpayers challenged the retroactive application of this amendment on the grounds that it deprived them of a vested right and that the timing of the change prevented them from bringing their properties into compliance with the new statute. One of these cases went before the First District Court of Appeal which found for the taxpayer, holding that the retroactive repeal of the exemption was unconstitutional. This case is currently on appeal to the Florida Supreme Court. The ruling will be limited to the 2013 tax year, but will impact any pending cases from that year. Ad Valorem Tax Exemption for Affordable Housing The law governing tax exemptions for affordable housing was changed mid-year 2013 with a provision that the amended statute was to be applied to the 2013 tax year. Prior to the change, property used for affordable housing was entitled to the exemption, even if owned by a limited partnership with a for-profit limited partner. The change disallowed this ownership structure, limiting the exemption to non-profit owners. A number of taxpayers challenged the retroactive application of this amendment on the grounds that it deprived them of a vested right and that the timing of the change prevented them from bringing their properties into compliance with the new statute. One of these cases went before the First District Court of Appeal which found for the taxpayer, holding that the retroactive repeal of the exemption was unconstitutional. This case is currently on appeal to the Florida Supreme Court. The ruling will be limited to the 2013 tax year, but will impact any pending cases from that year.

Julie M. Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

 

Updated June 2015

Interest Payments on Tax Refunds

In 2011 the Florida Legislature passed a law requiring payment of at least 75% of the taxes owing in order to proceed with a Value Adjustment Board (“VAB”) appeal. The law also provided that if the VAB determines a refund is due, the overpaid amount accrues interest at the rate of 12% per year. Tax collectors began issuing tax refunds with 12% interest on all cases reduced through the VAB process, whether the case went to hearing or was resolved by settlement. Last year, a newly appointed tax collector in Miami-Dade County changed the widely held interpretation of the law and decided that if cases were settled the county need not pay interest on the tax refund. In fact, this collector issued clawback letters seeking repayment of interest payments made in prior years. Certain taxpayers challenged the Tax Collector’s interpretation in Miami Circuit Court. The Court dismissed the complaint with leave to amend and ruled that the County did not have to pay interest on settlements as settlements are not a VAB determination. The Plaintiffs have amended their complaint and are awaiting further court action. Pending such action the tax collector will not pay interest on refunds resulting from settlements.

Julie M. Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

 

Updated March 2015

Student Housing on State or County Owned Land

State owned land is immune from taxation. Because counties are political subdivisions of the state, county owned land is also immune. State and county owned land is however, sometimes wrongfully assessed for ad valorem tax purposes. A recent 1st DCA case serves as a good reminder that states and counties are not subject to the 60 day statute of limitations to challenge assessments against immune property. Generally, a lawsuit challenging an ad valorem assessment must be brought within 60 days of certification of the tax roll. In the 2006 case of Cason v. Florida Department of Management Services the Florida Supreme Court reasoned that the statute setting forth the 60 day limitation applies only to taxpayers challenging assessments. Because the state and counties are immune from taxation, they are not “taxpayers” as defined in the statute, and are therefore not subject to the 60 day statute of limitations.

The recent case also touched on trust law. The court concluded that a private party which operated graduate student housing on behalf of the University of Florida held the property in trust for the state university even though there was no formal declaration of trust. The court held that no particular words or conduct are necessary to manifest the intention to create a trust, but that in the case before them, the documents were “replete with statements regarding the powers and duties of the private party for the benefit of the University, including provisions requiring ultimate disposition of the trust property to the University, all of which establish the creation of a trust."  This case may impact future public - private partnerships on state and county owned land.

Julie M. Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

 

Updated December 2014

Agricultural Classification of Lands

In 2014, the Florida legislature enacted two changes to the statute governing agricultural classification of land known as the Greenbelt Law. This law provides that lands used for commercial agricultural purposes shall be assessed at less than fair market value in order to protect and encourage agricultural production within the state. The classified values usually result in substantially lowered taxes.

The change to the law addresses application filing requirements, as well as classification of lands participating in a dispersed water storage program. Application for the classification is due by March 1st. However, the revised law provides that if the deadline is missed, a late application may be filed within 25 days of mailing of tax notices. The new law allows the property appraiser to grant the classification if the land qualifies and the applicant demonstrates that he was unable to apply in a timely manner or otherwise demonstrates extenuating circumstances. If the property appraiser does not make such a finding, a petition can be filed to the Value Adjustment Board. Late applications were allowed prior to this change, but the new law appears to create an additional permissible reason upon which a late filed application may be accepted. This addition, however, has not been widely interpreted by property appraisers throughout the state.

The second change requires continuation of an agricultural classification when agricultural production is disrupted because the landowner is participating in a dispersed water storage program with the Department of Environmental Protection or a water management district that requires flooding of the land.

Julie M. Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

 

Updated September 2014

Exemption for Non Profit Homes for the Aged

Our office has recently been working on a number of exemption cases for non-profit homes for the aged.  Due to recent changes to the law governing affordable housing exemptions, properties which no longer qualify under the affordable housing exemption may be eligible to qualify as non-profit homes for the aged. Unlike the new requirements for affordable housing, an applicant may qualify for the exemption, even if the property is owned by a limited partnership with a for-profit limited partner, provided that the sole general partner is a non-profit corporation.  There are a number of requirements to qualify for this exemption and a variety of provisions within the single statute. At least 75% of the occupants must be elderly or disabled.  Once this threshold is met, units rented to tenants who are either elderly or disabled and meet established income limits are exempt.  Even tenants that don’t meet the income limits may still receive a homestead exemption for their unit. In addition, portions of the home for the aged that provide nursing services are exempt, and properties financed by mortgage loans made or insured by certain HUD programs are exempt.

Julie M. Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

 

Updated June 2014

County Owned Land Can be Taxed

A recent Florida Supreme Court case, Accardo v. Brown, held that when leased to private parties, county owned land can be subject to ad valorem taxation if the lessee has such a level of control over the property that it is deemed to be the equitable owner of the property. State and county owned land is immune from taxation. The tenant can be deemed the equitable owner, however, if it has "practical dominion" over the property and holds the burdens and benefits of ownership.

There are numerous instances where a private lessee under a long term ground lease of county owned land is deemed to be the equitable owner of the improvements. Typically, however, the land itself is not taxed. In Accardo, the court went one step further and held that the land itself is taxable.

The court found that the taxpayers hold virtually all of the benefits and burdens of ownership of both the improvements and the land, and concluded "there is no basis for declining to extend the application of the doctrine of equitable ownership to the underlying land."

Julie M. Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

 

Updated September 2013

Property Tax Exemption for Low-Income Housing is Limited Once Again to Non-Profit Entities

For many years, low income housing in Florida was exempt from ad valorem taxation only if the property was owned entirely by a non-profit entity that was a corporation not for profit, qualified as charitable under 501 (c)(3) of the Internal Revenue Code. In 2009, the Florida legislature liberalized this requirement and allowed an exemption for low income housing owned by a Florida-based limited partnership if the sole general partner was a 501 (c)(3) corporation, even though the limited partners were for-profit entities. This was a departure from prior law, and made many low income housing tax credit properties eligible for tax exemptions for the first time.

In 2013, the legislature again modified this law and reversed course. Only properties wholly owned by not for profit corporations may qualify for the exemption. Limited liability companies which are disregarded entities for federal income tax purposes are treated as being owned by their sole members and can also qualify for the  exemption if the sole member is a 501 (c)(3) corporation. The law became effective in July 2013, and applies retroactively to the 2013 tax roll.

Julie M. Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

 

Updated June 2012

Higgs v. Good: Finally Settled?

Our past few updates have reported on lawsuits filed by various county Property Appraisers contesting the validity of the Florida Department of Revenue's ("DOR") Value Adjustment Board ("VAB") training materials and certain DOR advisory bulletins. In September 2011, we reported that an administrative law judge had upheld the training materials and bulletins as valid agency statements and not an improper creation of a rule. That decision has been affirmed by the Appellate Court without further comment by the Court.

The training materials provide the DOR's interpretation of the law that Higgs v. Good does not apply to VAB proceedings. In Higgs, the court found that if a Property Appraiser requests information from a taxpayer during the appraisal development process and the taxpayer fails to supply the information, the taxpayer cannot use the information in a judicial proceeding. The DOR training materials interpreted this decision to be limited to judicial review and not to VAB proceedings. DOR opined that as long as the taxpayer supplies the information in a timely manner in the VAB proceeding, the information must be admitted as evidence at the hearing.

The lawsuit also objected to DOR advisory bulletin PTO 11-01 which addresses the application of the eighth just valuation criterion in administrative reviews. The bulletin advised that the eight criterion must be properly considered in administrative reviews, is not limited to a sales comparison approach and must be properly considered in the income and cost approach.

The DOR has posted its draft of the 2012 training materials, which will become final by June 2012. The above-described interpretation that Higgs does not apply in administrative proceedings remains in the training materials. It remains to be seen whether the counties will again seek to judicially contest this interpretation.

Julie M. Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

 

Updated December 2011

Higgs v. Good Revisited

The Property Appraiser of Orange County has filed a complaint against the Florida Department of Revenue ("DOR") to invalidate DOR's training material which provides that Higgs v. Good does not apply to Value Adjustment Board ("VAB") proceedings. In September 2011, we wrote about an administrative law judge who upheld the training materials as a valid agency statement and not an improper creation of a rule. This new lawsuit is another attempt to reverse the DOR position.

In Higgs, the court found that if a Property Appraiser requests information from a taxpayer during the appraisal development process and the taxpayer fails to supply the information, the taxpayer cannot use the information in a judicial proceeding. The DOR training materials interpreted this decision to be limited to judicial review and not to VAB proceedings. DOR opined that as long as the taxpayer supplies the information in a timely manner in the VAB proceeding, the information must be admitted as evidence at the hearing.

The Property Appraiser seeks to extend the holding of Higgs in all property tax assessment challenges. The Property Appraiser's action also seeks to require compulsory disclosure of financial information, although Florida does not currently require compulsory disclosure of this information.

An administrative law judge recently issued an important decision regarding Department of Revenue ("DOR") Bulletin PTO 11-01 and training materials for Value Adjustment Board ("VAB") hearings. PTO 11-01 addressed the application of the eighth criteria adjustment. The training manual involved, among other things, the admissibility of information requested from a taxpayer. The Judge found that both PTO 11-01 and the VAB training standards promulgated by the DOR do not constitute invalid, unpromulgated rules. The Judge held that PTO 11-01 and the VAB trainings constitute agency statements as contemplated by Florida law and hence were a valid exercise of the DOR's authority. The Court did note, as admitted by the DOR, that the statements are not binding upon VABs or their magistrates in adjudicating legal disputes that arise during VAB proceedings. Accordingly, VABs and magistrates possess the discretion to seek advice from their independent counsel and deviate from the bulletin and training. The decision of the administrative judge may not be final as this decision has been appealed by the property appraisers.

Jeffrey L. Mandler, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

 

Updated September 2011

Department of Revenue Bulletins and Training Standards for Value Adjustment Board Magistrates Upheld

An administrative law judge recently issued an important decision regarding Department of Revenue ("DOR") Bulletin PTO 11-01 and training materials for Value Adjustment Board ("VAB") hearings. PTO 11-01 addressed the application of the eighth criteria adjustment. The training manual involved, among other things, the admissibility of information requested from a taxpayer. The Judge found that both PTO 11-01 and the VAB training standards promulgated by the DOR do not constitute invalid, unpromulgated rules. The Judge held that PTO 11-01 and the VAB trainings constitute agency statements as contemplated by Florida law and hence were a valid exercise of the DOR's authority. The Court did note, as admitted by the DOR, that the statements are not binding upon VABs or their magistrates in adjudicating legal disputes that arise during VAB proceedings. Accordingly, VABs and magistrates possess the discretion to seek advice from their independent counsel and deviate from the bulletin and training. The decision of the administrative judge may not be final as this decision has been appealed by the property appraisers.

 

Updated June 2011

Important Change in Florida Law: Taxpayers Must Now Pay Taxes To Proceed with VAB Appeal

Until now, taxpayers contesting the assessed value of their property before the Value Adjustment Board ("VAB") did not need to pay taxes until their case was finalized. This allowed many taxpayers to postpone payment for a substantial amount of time.

The legislature passed a new bill, which is expected to be signed into law, requiring payment of at least 75% of the taxes due in order to proceed with an appeal. The law will first apply to appeals filed for tax year 2011. Taxes must now be paid before delinquency or the petition will be dismissed. Because petitions are due in September, taxes are not delinquent until the following March and hearings can continue for over a year from filing, there are detailed logistics for implementation of this rule which exceed the scope of this bulletin. However, the critical takeaway is that the VAB will dismiss petitions for any properties that have unpaid taxes as of the March 31st due date. As a balance to this new requirement, the county will begin paying interest on refunds at 12% per annum. In the past, the county did not pay interest on refunds, regardless of how long they held a taxpayer's money.

Julie M. Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

 

Updated December 2011

Cost of Sale and Personal Property Adjustments in Tax Appeals

It has been the accepted practice of Florida property appraisers to assess property at less than 100% of market value under what is commonly referred to as “eighth criterion” adjustments to real property valuations.  The eight criterion refers to Fl. Stat. section 193.011 (8) which directs appraisers to consider net proceeds of sale, “after deduction of…reasonable fees and costs of sale” and personal property, when deriving assessed values.  A new Department of Revenue bulletin directs VAB magistrates to consider the eight criterion adjustment in determining assessments at hearings under the income capitalization and cost approaches, as well as the sales approach where it is most commonly applied. “When an actual sale of the property has not occurred, the appraiser must, in arriving at just valuation, place himself or herself in the position of the parties to a hypothetical sale.” “The just valuation standards of section 193.011 F.S., which include the eighth criterion, must be properly considered regardless of the valuation approach used and whether the property was sold.”  The bulletin is being challenged, but the DOR issued a statement directing VABs to follow it until the challenge is resolved.

 

Updated December 2010

Do Taxpayers Need to Respond to Requests for Information?

Since 2003 Property Appraisers throughout Florida have sent mass mailings to owners of commercial properties requesting income statements, rent rolls, appraisals and any other information relevant to the valuation of their properties. These notices state that per the Higgs V. Good case, failure to supply this information bars the taxpayer from later using it in administrative hearings.

A recent Department of Revenue Bulletin, and newly enacted training guidelines for Special Magistrates, clarify that Higgs does not apply to administrative hearings. The Bulletin opined that no statute or rule authorized a Special Magistrate to order the exclusion of relevant and otherwise admissible evidence based on Higgs. Provided a taxpayer complies with Department rules, failure by the taxpayer to provide income data during the Property Appraiser's development process does not preclude its consideration at the administrative hearing.

This rule may be challenged by certain appraiser's offices, but pending a ruling on that challenge, Higgs does not apply to VAB proceedings.

 

Updated June 2010

New Law Limits Back Assessment of Real Property

In Florida, county property appraisers can reach back as far as three years to assess property which has escaped taxation. These "back assessments" are used to re-capture taxes where the county may have missed new construction or otherwise incorrectly under assessed property. A new law, which takes effect in July 2010, creates a safe harbor for property owners who comply with all permitting requirements on new construction or improvements made to existing buildings. The law states that the county property appraiser may not back assess "with respect to a building, structure or improvement to land that was not assessed previously, if the owner complied with all permitting requirements when the improvement was built." Also, if the owner voluntarily discloses the existence of the property to the appraiser before January 1st of the year in which the property is first assessed, the county may not later back assess the property.

 

Updated March 2010

New Value Adjustment Board Rules

The Florida Department of Revenue recently approved the adoption of new rules governing the state's Value Adjustment Boards and the process of contesting property tax assessments. The DOR has been working on these rules for a number of years and has sought public input through numerous workshops.

The revised rules aim to create uniformity in the VAB process throughout the state. The rules are anticipated to become effective on March 30, 2010 and the DOR will issue a "uniform policies and procedures manual" prior to such date.

The rules cover many aspects of the appeals process including uniform training for magistrates, rules governing counsel to the VAB, procedures for telephonic hearings, procedures for remand of cases to the property appraiser, guidance on late filing of petitions, the right to reschedule hearings for good cause and the petitioner's right to be heard on a scheduled petition within a reasonable amount of time.

 

Updated June 2009

Presumption of Correctness in Property Tax Appeals

A recent bill changes the presumption of correctness in Florida property tax appeals. Under the new law the appraiser must prove by a preponderance of the evidence that its assessment was arrived at by complying with statutory requirements and professionally accepted appraisal practices. If the appraiser fails to prove this, then its assessment does not have a presumption of correctness.

If the appraiser succeeds in its showing, then the taxpayer must prove by a preponderance of the evidence that the assessment does not represent the just value of the property or is arbitrarily based on appraisal practices different from those applied to comparable property in the county. If the taxpayer makes this showing, then the special magistrate shall establish the assessment if there is competent, substantial evidence of value in the record. If the record lacks such evidence the matter must be remanded to the property appraiser with directions from the magistrate.

This new statute takes effect for 2009 assessments and represents a substantial change in favor of taxpayers challenging their assessments.

 

Updated March 2009

Good Faith Payment of Taxes

In Florida, partial payments of real property taxes are generally not permitted. One exception is when an assessment is being contested, a taxpayer may make a good faith payment of "not less than the amount of the tax which the taxpayer in good faith admits to be owing." In a recent case, the court addressed good faith payments and wrote that the legislative intent was to ensure that revenue continues to flow to counties during the potentially lengthy legal appeal process. Although the court found it is not statutorily required, the best practice when making a good faith payment is to submit such payment with a cover letter expressly reciting that it is a good faith payment and setting forth the taxpayer's method of calculation of the taxes being paid. We also recommend identifying the appropriate person in the tax collector's office and notifying them that a good faith payment is being made so it can be processed and applied correctly.

 

Updated December 2008

Florida Supreme Court Clarifies Whether Property Appraiser May Challenge Constitutionality Of A Statute

In Florida, County Property Appraisers generally can not challenge taxing statutes on the grounds that are unconstitutional. However, in recent years, the courts have recognized two limited exceptions to this rule: (i) if the taxing statute at issue involves the disbursement of public funds or (ii) if the constitutionality is raised as a defense in an action initiated by the taxpayer.

In 2007, based on the second exception, above an appellate court permitted a property appraiser to challenge the constitutionality of a statute as a defense to a taxpayer's lawsuit seeking a tax exemption. That case was appealed to the Florida Supreme Court which resolved a conflict among the district courts on this issue. The court held that a "property appraiser acting in his or her official capacity does not have standing to raise the constitutionality of a statute as a defense in an action filed by a taxpayer." This ruling clearly resolves the matter and prevents County Property Appraisers from challenging the validity of the taxing laws.

 

Updated September 2008

Property Tax Reform Approved by Voters

We previously wrote about a recent change in Florida law which for the first time caps increases in assessed values of real property for ad valorem tax purposes. We are writing now with updates to our prior article based on changes that have been made in implementation of this law.

Beginning in 2009 the new law will limit assessment increases to no more than 10% over the prior year's assessment, regardless of the increase in market value. Properties may be reassessed at market value upon a change of ownership or control, including a change of ownership of the legal entity that owns the property. Changes, additions, reductions or improvements to property will not be subject to this cap.

When first enacted, the law required property owners to apply for the cap on increases. This has now changed and no application is required. The cap will be automatically applied to all properties.

Property owners must, however, notify the county property appraiser of any change in ownership or control of a property, including a change in control of the entity that holds title to the property, even if a deed is not recorded.

 

Updated March 2008

Property Tax Reform Approved by Voters

In January, voters approved a constitutional amendment which dramatically changes assessments of commercial property in Florida. Traditionally all property in Florida, other than primary residences with homestead exemptions, has been re-assessed annually at market value.

Beginning in 2009 the amendment will limit assessment increases to no more than 10% over the prior year's assessment, regardless of the increase in market value. (The cap does not, however, apply to school district levies which are approximately one third of the total tax bill.) Properties may be reassessed at market value upon a change of ownership or control, including a change of ownership of the legal entity that owns the property. Changes, additions, reductions or improvements to property will not be subject to this cap.

To receive the assessment limitation property owners must file an application with the county property appraiser on or before March 1, 2009. Application forms are currently being drafted and are not yet available.

While this cap will help keep taxes down for property owners it will also create disincentives to buying and selling property and will lead to inequitable assessments of similar properties.

 

Updated December 2007

Proposed Property Tax Legislation

The Florida Legislature recently approved a proposed amendment to the Constitution affecting property taxes. The amendment goes before voters January 29, 2008 and requires 60% approval to pass.

The amendment would impose a 10% cap on increases in the annual assessment of all properties other than primary residences, which are already subject to a 3% cap on increases. Such properties would only be reassessed at just value after a "qualifying improvement" and may be reassessed after a change of ownership. The cap does not apply to school district levies which are approximately 1/3 of the total tax bill. This is a substantial change from the current law, which requires all properties, except those with a homestead or other exemption, to be assessed at just value each year.

In addition, the amendment creates portability of homestead exemptions and creates an exemption for personal property up to $25,000.

 

Updated September 2007

When Does the Property Appraiser Have the Ability to Challenge a Statue?

In Florida, the Property Appraiser does not have the ability to challenge the constitutionality of a statute on the basis that such statute is contrary to limitations imposed by the United States Constitution or the Florida Constitution. However, Florida courts have recognized two exceptions to this rule: (i) if the taxing statute at issue involves the disbursement of public funds or (ii) if the constitutionality is raised as a defense in an action initiated by the Taxpayer.

Although courts have established these two exceptions, there is persuasive authority for the position that the Property Appraiser may not raise the constitutionality of a statute even in a defensive posture. Yet, a recent First District Court of Appeal decision chose to ignore these arguments and allowed a Property Appraiser to raise as an affirmative defense, a challenge to the constitutionality of a statute that defined a special tax district as a "municipality" for property tax exemption purposes.