TALLAHASSEE — Delivering on a priority for Gov. Charlie Crist, the Legislature has voted to put a tax break for first-time home buyers on the 2010 ballot, in the hopes of providing a lift to Florida’s sagging real estate market.
The proposed constitutional amendment, passed Friday, also would lower the annual cap on assessment increases for businesses, rental properties and vacation homes from 10 percent to 5 percent.
To become law, 60 percent of voters will have to approve the amendment in November 2010. The tax breaks would apply beginning in 2011.
First-time home buyers would be exempt from paying taxes on 25 percent of their home’s value. For someone who buys a $200,000 home, the savings from the new exemption would be about $1,000.
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Any buyer who hasn’t claimed a homestead exemption in the previous eight years would qualify. The savings would be phased out over five years.
Supporters said it will spur home sales and get at the heart of Florida’s housing crisis: a backlog of 300,000 homes waiting to be sold.
The tax break, coupled with low interest rates and the drop in home prices, makes it a great market for renters to buy their first home, said Michele Bellisari, a Boca Raton real estate agent.
“It’s a great opportunity,” she said. “Most of the time they can buy for no more than they’re renting.”
Property taxes, the dominant issue for the past two years, have receded from the state’s political agenda, amid the larger economic crisis. Also, the drop in home values has produced lower tax bills and turned down the pressure on state officials to act.
Still, supporters pitched the break for first-time home buyers as the cure for the stagnant housing market, a promise the voter-approved Amendment One failed to deliver on.
“Right now, our homes are not being sold at all,” said Sen. Evelyn Lynn, R-Ormond Beach, the sponsor. “People are dropping their payments. They’re walking away from their homes. Nothing is selling.”
Critics said the property tax amendment would deal another blow to schools, cities and counties. The first-time break is expected to cost schools and local government $10 million statewide in the first year, and that number would rise over time.
“Our cities are laying people off every day,” said Sen. Chris Smith, D-Fort Lauderdale. “We’ve gone too far. We cannot keep a stranglehold on our local municipalities and counties.”
The House sponsor, Rep. Carl Domino, R-Jupiter, said he thought the amendment would be a boon for governments by warding off further declines in real estate values if fewer homes are empty.
“If there are 100 homes in the neighborhood and 40 of them are up for sale . . . the consequence of that is the property assessors would have to lower the value in that neighborhood,” Domino said.
The assessment cap would create a system similar to Save Our Homes for non-homestead properties, the category hit hardest in the run-up in values. Over time, the 5 percent assessment cap is expected to be pricier for local governments, quickly rising to a $266 million hit three years after going into effect. The cap would not apply to school taxes.