Newsletter: April 2008

Palm Beach County Home Prices Inch Upward
Home prices in Palm Beach County edge up slightly in February, the second month in a row of month-over-month increases signaling the housing market has hit the bottom. The forecast over the next few months is also bright with lower interest rates and falling inventory.

Understanding Amendment One
A Message from Property Appraiser Gary R. Nikolits, CFA
On Tuesday, Jan. 29, 2008, voters approved Amendment One, a change to Florida's Constitution. The new Amendment allows residents with a Save Our Homes assessment cap to transfer all, or a significant portion, of their tax savings to a new property anywhere in the state. The Amendment also doubles the homestead exemption for properties valued at $75,000 or more for all tax levies except school districts. It exempts the first $25,000 in value of equipment used by businesses, and creates a 10% annual assessment cap similar to Save Our Homes, for non-homestead properties.

Amendment One is retroactive to Jan. 1, 2008. That means if you have applied for a new homestead exemption for 2008, and are entitled to transfer a homestead assessment difference from an existing homestead exemption for 2007, please file Transfer of Homestead Assessment Difference form, DR-501T , with the Property Appraiser's Office by Monday, March 3, 2008. Co-applicants transferring from a different homestead must fill out a separate form. If your previous homestead was in a different county, please include your contact information.

You may download Form DR-501T here . This form must accompany your original application for Ad Valorem Tax Exemption, Form DR-501 .

Here is a brief description of the four components of Amendment One:
PORTABILITY - If the market value of your homestead property is greater than its assessed value, Amendment One permits you to transfer that difference in value to your new property under the following scenarios:
If the property you are moving to is more expensive than the property you are moving from, you will be able to transfer your actual cap savings to your new property. The maximum amount of cap savings you can transfer is limited to $500,000.

Example: If the market value of your current homestead property is $400,000 and its assessed value is $250,000, the amount of cap savings you have (the difference between the market and assessed values) is $150,000. If your new property has a market value of say, $500,000, you can move the $150,000 cap savings to your new property when you file for your homestead exemption. With portability the assessed value drops to $350,000. Based on a tax rate of 20 mills, portability would give you a $3,000 ad valorem tax break on your new property.
If the property you are moving to is less expensive than the property you are moving from, you will be able to transfer a percentage of your actual cap savings to your new property.

Example: If the market value of your current homestead property is $400,000 and its assessed value is $250,000, the amount of cap savings you have (the difference between the market and assessed values) is $150,000. If your new property has a market value of say $300,000, you can move a percentage of your cap to your new property when you file for your homestead exemption.

The amount of cap savings you can take with you to your new property is determined by dividing the market value of your new property by the market value of your current homestead property. You then take that amount and multiply it by th e assessed value of your current homestead property. In the above example, the result would be $187,500. The market value of your new property, $300,000, is divided by the market value of your current homestead property, $400,000. The result is 0.75. You then take the assessed value of your current property,which is $250,000, and multiply that amount by .75. That will give you $187,500, which will be the assessed value for your new homestead property.

While this may sound confusing, it is really basic math and our computer systems are programmed to automatically handle the calculations. Our Portability Calculator is similar to the tax calculator already located on our Web site. The Portability Calculator will help you estimate your property tax savings should you think about moving and transferring your assessment cap.

There are no changes planned to the existing Save Our Homes assessment cap benefits. Portability is an added benefit.

DOUBLING THE HOMESTEAD EXEMPTION - This increases the homestead exemption from $25,000 up to $50,000. The original $25,000 homestead exemption will continue to apply to all ad valorem tax levies. The additional $25,000 homestead exemption will apply to all ad valorem tax levies except school district levies. Residential property owners who currently receive a homestead exemption and who continue to qualify for the exemption will automatically receive the additional homestead exemption. No further application will be necessary.

Here's how it will work for you: Currently the first $25,000 of a property's assessed (or capped) value is exempt from ad valorem taxes. Under Amendment One, there is no additional exemption for property with a value of between $25,001 and $50,000. The exemption will remain at $25,000 for a property with a value of up to $50,000.
Beginning at a value of $50,001 and continuing through an assessed (or capped) market value of $75,000, the new homestead exemption will increase dollar-for-dollar with the increase in the value of the property.

Example: A property with a $50,000 assessed (or capped) value will receive a homestead exemption of $25,000.

A property with a $60,000 assessed (or capped) value will receive a homestead exemption of $35,000.

A property with a $75,000 assessed (or capped) value will receive a homestead exemption of $50,000.

The maximum homestead exemption a property can receive is $50,000. All other exemptions that are currently applicable will remain in effect. The typical tax savings for a homestead property with a value of $75,000 or more will be about $300.

NON-HOMESTEAD PROPERTY ASSESSMENT CAP - Beginning January 1, 2009, an assessment cap similar to Save Our Homes will go into effect for non-homestead properties. The annual assessment cap on these types of properties will be 10%.

To receive the assessment cap the owner of the property will be required to file an annual application. This non-homestead property assessment cap applies to owners of second homes, commercial properties and unimproved lands. It does not apply to school district levies, and will expire in 2019 unless renewed by voters in the 2018 general election.

TANGIBLE PERSONAL PROPERTY EXEMPTION - The first $25,000 in value of the furniture, fixtures and equipment used by a business will be exempt from taxation.Businesses with tangible personal property assets will be required to file an initial return to qualify. Thereafter the requirement to file an annual return is waived unless the value of their assets exceeds $25,000.

This exemption does not apply to mobile homes classified as tangible personal property.

This exemption applies to all ad valorem tax levies, including the school district.

Tax savings can be up to $500 based on a tax rate of 20 mills.

Jupiter is Jumping
Another step forward this last week that Max Planck Society is headed to Jupiter. Last year the county and state began negotiations to lure the Germany-based biotech research giant to Jupiter with a $190 million package of government incentives, including $87 million in county funds over 10 years. The county hasn't finalized its contract negotiations with Max Planck, but the state, which has a separate contract with the researcher, has committed funds. According to Assistant County Administrator Shannon LaRocque, the state has executed its contract and is sending an initial payment of $10 million and in June will send another check for $30 million to Max Planck.

June also is when LaRocque said she plans to finalize a grant agreement between the county and the research organization. The documents must be approved by county commissioners. The agreement calls for the county to sell its first bond, for $39.4 million, on October 1, 2008.

If Max Planck locates in Palm Beach County this would be Max Planck's 79th institute and its first in the United States. The massive research society studies all forms of life sciences. The proposed Jupiter facility will be for bio-imaging. The state of Florida projects a economic analysis that it will create 1,824 jobs over the next 20 years, infuse $2.4 billion in labor compensation and generate another $5.3 billion in gross state product. LaRocque described the expected Max Planck Institute to be "an important international recognition" of Palm Beach County's potential as a hub of biotech activity.

Forbes.com chimes in.
This past month, Forbes.com, an online business magazine, recognized the county as one of its top picks for up-and-coming tech areas. It ranks Palm Beach County No. 3 on the Top 10 list of "Hotbeds of Tomorrow's Technology," behind Columbus, Ohio, and Santa Fe, N.M.

Baseball and Golf does it get any better than this? Not only is Jupiter known for some of the most popular spring training for baseball with St. Louis and Miami attracting record breaking crowds and buyers of real estate we can’t forget golf. Rumors along with sightings are flying on possible new residences joining the likes of Tiger Woods and Greg Norman with Michael Jordon and Ernie Els shopping for possible digs in our community.

Singer Island Happenings
Ocean Mall set for redevelopment. Tenants at the Ocean Mall are getting ready to pack up and move so the redevelopment of the 11 acres may get underway in May. The new project will include a 60,000 square foot retail building that will feature several restaurants, retail space and a stand alone hotel. Catalfumo Construction hopes to demolish the building in May and estimates the new building will take nine months to complete.

Marriott Vacation Club International, the vacation ownership division of Marriott International, Inc., announced the development and sales start of Marriott’s Oceana Palms on Singer Island. The resort is proposed to include 169 two-bedroom/ two-bathroom villas (at build-out) and slated for occupancy in early 2010. Three spacious villa floor plans will feature more than 1,100 square feet of living space, offering a blend of traditional furnishings with fresh, contemporary pieces that create an attractive and relaxing atmosphere. Marriott’s Oceana Palms will offer spacious balconies with views of graceful sailboats and stunning sunrises. Each villa can accommodate up to 8 guests. The new development is being constructed on the former site of Crown Royal Hotel.

Homeowners take first-ever tax deduction for mortgage insurance
Many qualified taxpayers are preparing to claim their first-ever tax deduction for mortgage insurance premiums on home loans that closed in 2007. The tax deduction was first approved by Congress in late 2006 and applied to loans with mortgage insurance that closed in 2007. In an important move to further assist borrowers, Congress voted in December of last year to extend the mortgage insurance tax deduction through 2010.

Extension of the tax deduction for mortgage insurance premiums was part of the Mortgage Forgiveness Debt Relief Act of 2007. The deduction allows households with an adjusted gross income of $100,000 or less to deduct the full cost of their government or private mortgage insurance premiums on their federal tax returns. Families with incomes between $100,000 and $109,000 are eligible for a reduced deduction. “For the first time, many low- and moderate-income families who purchased homes with private or government mortgage insurance, will be able to deduct those premiums when they file their 2007 federal tax returns next month,” says Kevin Schneider, president of the Mortgage Insurance Companies of America (MICA). “On average, this year’s tax break could be worth $350 per taxpayer – an annual deduction that qualified homeowners can take each year through 2010.” “Like many other populations, our community relies on homeownership to build wealth.

Government and privately insured mortgages help low- and moderate-income families gain a foothold in the housing market and realize their piece of the American Dream,” says Timothy Sandos, president and chief executive officer of the National Association of Hispanic Real Estate Professionals (NAHREP).

© 2008 FLORIDA ASSOCIATION OF REALTORS®