Sunday, July 02, 2006

CALAMITIES AND AD VALOREM TAX VALUES [FLORIDA]

Death and taxes are two certainties, in Florida, as elsewhere. But Florida has some other certainties, or at least near certainties - hurricanes and ad valorem tax value increases. When hurricanes and ad valorem tax value increases coincide, hurricane victims get a double whammy. Such items can coincide because if a home is damages by a hurricane, and then repaired or rebuilt, the home may have more value (and thus a higher ad valorem tax value) than before the storm damage, thus resulting in higher ad valorem taxes.

Recently enacted legislation provides protection to Floridians against this double whammy. L. 2006, H7109, eff. 06/27/2006, and applicable retroactively to homestead property replaced on or after 01/01/2006, provides that when homestead property is assessed for ad valorem tax purposes, changes, additions, or improvements that replace all or a portion of homestead property damaged or destroyed by misfortune or calamity will not increase the homestead property's assessed value when the square footage of the homestead property, as changed or improved, does not exceed 110% of the square footage of the homestead property before the damage or destruction. Also, assessed value will not increase if the total square footage as changed or improved does not exceed 1,500 square feet.

These rules apply to changes, additions, or improvements begun within three years after the January 1 following the damage or destruction of the homestead.

The new law also allows the continuation of the ad valorem tax homestead exemption during the period that the damaged property is uninhabitable on January 1 after the damage or destruction occurs, if the property owner notifies the property appraiser that he or she intends to repair or rebuild the property and live in the property as his or her primary residence after the property is repaired or rebuilt, and does not claim a homestead exemption on any other property. However, failure by the property owner to commence the repair or rebuilding of the homestead property within three years after January 1 following the property's damage or destruction constitutes abandonment of the property as a homestead.

Text of Law
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