Ruling on homestead tax exemptions shakes up affordable housing efforts
Written by WSLR News on Saturday, July 29, 2023
A Florida Supreme Court ruling in favor of the Sarasota County Property Appraiser is having unexpected side-effects. What does this mean for the future of affordable housing in Sarasota?
By Sophia Brown
Original Air Date: July 28, 2023
Johannes Werner: A Florida Supreme Court ruling in favor of the Sarasota County Property Appraiser is having unexpected side effects on affordable housing. For starters, the shutdown of the roommate matching program by the Sarasota County Housing Authority. WSLR reporter Sophia Brown talked to a Property Appraiser official to find out whether there still is a future for affordable housing via roommates mother-in-law-flats.
Host: Eight years ago, a resident took the Sarasota Property Appraiser to District Court and won. But Property Appraiser Bill Furst appealed, and in April, the Florida Supreme Court took up the case and ruled that anyone renting out part of their property to a tenant cannot claim a full homestead tax exemption. Anyone caught attempting to do so must pay a hefty fine.
This case has thrown a wrench into Sarasota’s already shaky, affordable housing market, but many of the effects remain to be seen. In the meantime, one member of the Property Appraiser’s office spoke to WSLR News to clear a few things up.
The case in question was Furst v. Rebholz. In 2014, the Property Appraiser’s office first became aware that one Rob Rebholz was renting out approximately 15% of his property to a tenant while still attempting to claim a full homestead tax exemption.
In Florida, the homestead exemption is a legal protection that allows homeowners to reduce the taxable value of their primary residence by up to $50,000, meaning that they have fewer taxes that need to be paid.
However, Bill Furst argued in court this April that a homeowner is not eligible for this exemption for the portion of the property being rented out, and the Florida Supreme Court agreed. Florida Statute Chapter 196 on exemptions goes into further detail, but Chief Deputy Property Appraiser Brian Loughrey summarizes what happens to someone attempting to claim the full exemption under the circumstances.
Brian Loughrey: Right, so we go back to when it first happened. And then we recalculate the taxes that should have been paid on the property, and there is a 50% penalty and 15% per year interest on that amount, and it can go back as far as 10 years. And the penalty and the interest are in statute. Those are not arbitrary. They’re not up to us.
Host: Loughrey estimates that around 1,800 instances of someone claiming a full homestead exemption that they aren’t entitled to have been recorded since 2014, out of 130,000 total homesteads in Sarasota, and calls it an uncommon problem.
The Sarasota Property Appraiser is enforcing its homestead exemption rules in two primary ways. The first is by using a series of large multipurpose and subscription-based databases by an outside vendor. These databases track the licenses and registrations of various people who apply through the office: car registration, boat registration, voter registration, business licenses and more. From there, the office confirms the owner of a piece of property and that is it their primary residence.
Loughrey explained that a lot of times when someone applies for a homestead exemption that they aren’t entitled to, it’s because they already have a primary property out of state, and homestead exemptions only apply to full-time Florida residents.
BL: Most people follow the rules and some people unfortunately try not do, and some people unwittingly don’t follow the rules. There’s not always some sort devious plan, sometimes it’s just, I forgot I had this elsewhere. But our job as always is to be fair and equitable to all taxpayers. And if the law says you don’t qualify, we can’t allow it to stand.
Host: The other way the Property Appraiser enforces homestead exemption rules is through anonymous tips people can leave the office when they suspect a person is renting out their property.
BL: We do get a lot of people who will just tell us, “Hey, I live across the street, I live down the block, I live next door, they’ve had a tenant in this house for years.” Sometimes it’s as vague as, “I’ve seen a car without state plates in their driveway for six months now.” And then you know, everything we get, we look into.
Host: Seems simple enough, except this ruling has already had some unintended negative effects on Sarasota’s affordable housing market. Last month, and in response to the Furst v. Rebholz ruling, the Sarasota Housing Authority’s HomeShare program was shut down.
This was a program that worked to match those seeking affordable housing in the area with homeowners looking to rent out parts of their property. The program primarily worked with low income or housing insecure people, and the homeowners that participated were predominantly retirees looking to supplement their income as a cost of living continues to inflate.
Under this ruling, homeowners participating in this program would have potentially needed to pay more in back taxes than the rent that they could collect would make up for. And attempting to go under the Property Appraiser’s radar would be especially risky when such a hefty fee is at stake.
While there aren’t yet many solid answers on how else this ruling might transform the affordable housing market in the coming months, Loughrey did emphasize that just because a person renting out their property can’t claim a full homestead tax exemption, does not mean that a person can’t or shouldn’t rent out parts of their property at all, even if taxes may dissuade many from doing so.
BL: It’s not that you can’t do this. You can certainly rent out part of your property without losing your homestead. You still retain the homestead on the part that’s not rented out. So it’s not like you rent a room and you lose your homestead altogether. It’s not the case. It’s not the large impact some people think. People have this misconception that as soon as they do this, they cannot have a homestead. Not true, you’re just going to have slightly higher taxes on the part that you are renting out.
Host: Loughrey added that the best way for people to rent out parts of their property without risking the additional fees, is to clear it with the Property Appraiser’s office on January 1.
BL: We do our values, we qualify our exemption applicants strictly based on what is the status on January 1, anything in between doesn’t matter until the next January 1. The problem comes in when someone tries to do this without our knowledge and we find out 10 years later, and then we are required by law to go back and back tax them and charge the 50% penalty, the 15% interest. if they would have just told us in the first place, none of that would happen.
Host: This has been Sophia Brown reporting for WSLR News.
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