We’ve just returned from filing 1,875 real estate tax appeal petitions for the 2010 tax year.

If you are still interested in protesting the assessed value of your property you can file a late petition with the Miami-Dade County Value Adjustment Board, by visiting the 17th Floor of the Government Center downtown or by visiting their website at http://www2.miami-dadeclerk.com/vab.  Late petitions will only be accepted and scheduled for a value hearing if you have a legitimate and reasonable reason for not having filed between Aug 1st – Sept 20th.

For all the clients that have previously contacted us, your petitions will be processed by the county shortly and will receive an agenda number for scheduling.  Due to the overwhelming amount of cases filed in 2008 and 2009 we do not expect the county to be prepared to hear 2010 cases until at least Jan. 2011.

Due to changes in state laws there is a new 10% per year assessment increase cap in place for the assessed values for the City, County, and Region portions of your tax bills.  However this cap does not apply to the School Board portion of the bill.

Unfortunately the capping system only affects the value of the property and not the total taxes owed, similar to the way the “Save Our Homes” amendment capped the increase of Homesteaded properties at 3% per year or the CPI, whichever is less.

Thus you may notice that despite the value of your property decreasing or staying the same the taxes you are required to pay has gone up or stayed the same.  See our post If Real Estate Values Have Gone Down, Why Did My Taxes Go Up? for more in depth explanation.

In order to continue to provide the level of service you deserve, we have had to slightly alter our fee structure, because it is now possible to achieve a tax savings on the uncapped School Board Portion of the tax bill, while not achieving a savings on the other portions.  Because of this we are charging 5% more than before on the School Board portion with represents 1/3 of the tax bill and 5% less on the remaining 2/3 of the tax bill.

Please read your appeal agreement to see the exact changes.

In this first example Market Value has risen beyond the 10% capped value, and thus our reduction resulted in a large savings for the School Board portion and a small savings in the other portions.  Our fee in this example represents 38% of the achieved savings, but is of smaller amount than the other examples.

In this example both Market and Assessed Values are the same resulting in a large savings in both the School Board and Other portions of the tax bill.  Our fee in this example represents 33% of the achieved savings.

In this example both Market and Assessed Values are the same resulting in a large savings in both the School Board and Other portions of the tax bill.  Our fee in this example represents 35% of the achieved savings.  This was our old fee structure which is no longer used.

As you can see from the examples,  in cases where Market and Assessed Values are equal then you will be paying approximately 33% of the achieved savings, less than before.  In cases where Market Value exceeds Assessed Value you will paying 38% of the savings but the fee amount will typically be lower.

In Florida this is the time of year when property owners are notified of the amount of the real estate taxes to expect on the tax bill which will be sent the first of November.  This notice know as a TRIM or “Truth in Millage” notice.   In some cases, for the year of 2010 it is showing an increase in the real estate taxes, even though values have declined.

This increase is because of one of two possibilities.  Although the Market Value may have declined the “Assessed Value” (the amount used to calculate your taxes) increased because of the provisions Florida’s “Save or Homes” or Homestead Exemption legislation.  Homestead Exemption provides that the assessment for residential properties, with Homestead Exemption, cannot increase by more than 3% or the Cost of Living, whichever is less.  For the year of 2010 the Cost of Living increase is calculated at 2.7%.  Therefore, for residential “Homestead Exempt” properties the assessment increased by 2.7%, This can happen up until the Assessed Values and Market Values meet.  But under no circumstances can your Assessed Value exceed your Market Value.

The other possibility is that the Millage Rate increased more than the property’s value decreased.  Real estate taxes are calculated by multiplying the “Assessed Value” by the “Millage Rate”. The “Millage Rate” is based on the amount of money local government needs from real estate assessments divided by the total “Assessed Values.”  For example, if government needs $1,000,000 to operate and the total “Assessed Value” is $50,000,000 the millage rate is 20 mills or more simply 2.0% of “Assessed Value”.  If government needs $1,000,000 and the total “Assessed Value” declines to $45,000,000 then the Millage rate will increase to 22 mills or 2.2%.  Therefore, when “Assessed Values” decline and government needs remain the same the Millage rate will increase.  For properties in the City of Miami, the Millage rate from 2009 to 2010 increased by 14.27%.

For example, if your property is in the City of Miami, unless the “Assessed Value” decreased from 2009 to 2010 by more than 14.27% your real estate taxes will be the same or higher.  This increase in taxes is a result of the millage rate increase because of the decline in “Total Assessed Values” without a equal decline in the Governments budget for the year.

Although the “Millage Rate” for all classes and types of properties in a government area are the same, the limitation on the increase in assessments under “Homestead Exemption” does not apply to non-homestead properties, for those properties there is now a 10% increase cap for the portions of your tax bill that are paid to the City/County/Region, but the cap does not apply to the School Board portion of which for the Assessed Value always equals Market Value, and is taxed on that amount.

In reviewing the assessment for commercial properties of our tax appeal clients, we have found moderate increases in the assessments but with the increase in the millage rates the real estate taxes have increased.  For example, if your property is in the County and the “Assessed Value” remained the same, the increase in the “Millage Rate” of 8.6% means your real estate taxes are 8.6% greater.

What can you do to make sure you are only paying your fair share of real estate taxes?  If you believe your assessment is too high you can file an appeal petition or have us appeal on your behalf.  If you believe the millage rate is too high you should attend the City and County Budget Hearing Meeting to express your feelings and demand a reduction in government spending.  One solution I have suggested is that every government expenditure, every payment and every expense should be easily available for public review online.  Our government needs to be held accountable for how they spend our tax dollars.

By Tom Dixon

Question:
My parents owned their home for many years and had Homestead Exemption.  I’ve been living in my parent’s house and taking care of them in their last years.  But last year they passed and when I inherited the house, the Homestead Exemption was lost and now the real estate taxes have tripled.  What can I do?

Answer:
This is one question we get every year around this time and is one we unfortunately can’t be that helpful with other than informing the public ahead of time and referring our clients to a knowledgeable estate planner or lawyer.

Sadly if you find yourself in the above situation it may be too late.  But with the proper estate planning this situation can be avoided.  There is a little known provision in Florida Law that allows property to be transferred into a Trust and with the proper legal language allows the Homestead Exemption to be passed down to the children given that they have been living with their parents and have no other homestead.  For a more detailed explanation and to setup this up we recommend speaking with our friend and colleague Chris Vasallo at (305) 233-9066.

Vasallo Sloane, P.L.
12394 S.W. 82 Avenue
Pinecrest, Florida 33156

Tel:  305.233.9066
Fax:  866.389.2760
Email:  chris@vasallosloane.com