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Hernando Today

Traversing The Property Tax Maze

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By MICHAEL D. BATES

The Tampa Tribune

Published: May 2, 2008

Hernando Today

Editor's note: This is the second in a series of articles on property values in Hernando County and how they relate to the county's budget process.

BROOKSVILLE - Joe Taxpayer is furious. He gets his tax bill and sees that the market value of his Brooksville home went through the floor but its assessed value went up.

What's up with that?

In 2007, the market value of his home was $250,000. In 2008, the market value dropped to $200,000 because of the housing crash. However, the assessed value of his home climbed 3 percent, from $150,000 in 2007 to $154,500 in 2008.

How's that possible? The market takes a nose dive, but Joe's assessed value on his home goes up.

That's because of the recapture rate, a state-mandated law that requires property appraisers to adjust assessed values by 3 percent or the consumer price index, whichever is less. Because Joe's house increased in value by double-digit percentages during the boom years of 2003-06, county property appraisers could only increase assessed home values by 3 percent due to the Save Our Homes cap. Consequently, the market value of homes skyrocketed but the assessed values remained relatively constant. So even though market values declined in 2007, assessed values rose in 2008 because of the continued gap in market and assessed values.

On top of that, Joe doesn't understand why the value of Hernando County's tax roll increased 15 percent from 2006 to 2007 when the housing crisis began.

"I know I can't sell my house for what I paid for it last year," Joe says. "What kind of deal is this?"

It's a logical question. And one that the property appraiser's office gets much of the time.

It has to do with that weird word, "arrears."

That means Property Appraiser Alvin Mazourek and his team determine property assessments as of Jan. 1 of each year, based on sales from the previous year.

That 15 percent increase from 2006 to 2007 was based on 2006 data, which showed a 16.95 increase in the average sales price of a single-family home. The housing market was still fairly good in 2006.

However, the 2008 tax roll is based on 2007 data and that's when the roof fell in on the market. In 2007, the average selling price of a single-family home declined 11.24 percent from the previous year - from $213,442 to $189,442.

That is why the value of Joe's house went down.

So What Does Mazourek Actually Do?

Everyone knows Hernando County has a property appraiser. But what exactly does he appraise?

Short answer: All "real" and "tangible personal property."

OK, some of you may already be lost by those terms. So before going further, let's clear it up: Real property is land and all the things attached to it, according to the Lectric Law Library (LLL) Web site.

Anything that is not real property is called "personal" property. Put another way: Personal property is anything that isn't nailed down, dug into or built onto the land, says the LLL.

A house is real property. A dining room set or a computer table used by a business is not.

In 2007, there were some 11,214 tangible personal property accounts filed in the county, with a market value of $1.1 billion.

But it's the real property that is the biggest cash producer for the county.

In 2007, the property appraiser appraised 115,488 "real" property parcels in Hernando County and 11,214 personal properties for a total of 126,702.

Residential real property is divided into several categories, the largest being single-family homes.

In 2007, Property Appraiser Alvin Mazourek's office computed that the market value of all residential real properties in the county was $13.6 billion. The problem is, the dollar volume of single-family residential sales plummeted in 2007.

Every year since 1995, Hernando County saw an increase in the dollar volume of home sales, with the peak occurring in 2005 with $1.2 billion.

But in 2006, the housing market started tanking. And so did the value of homes. More than 10 years of steady growth in tax revenue was wiped out in one fell swoop by the sub-prime mortgage crisis and the investor-fueled frenzy.

Mazourek's office recorded a 13.3 percent decrease in dollar volume of single-family homes in 2006 and a whopping 57.1 percent drop-off in 2007.

Looking For $9.1 Million

If the property appraiser didn't already have enough balls in the air to juggle when computing property assessments, along comes Amendment 1, passed overwhelmingly by voters in February who were crying for property tax relief.

Well, they got relief in the form of a doubled homestead exemption: From $25,000 to $50,000 for homeowners whose property is assessed at $75,000 or more.

Included in that amendment is the portability of the Save Our Homes tax benefit.

And, homeowners will be able to take their Save Our Homes benefit with them to their next home. That constitutional provision sets a limitation of 3 percent on annual assessment increases on homesteaded-exempt property.

For example: If a person lived in a home 20 years and accrued a Save Our Homes valuation less than the actual market value of the house, the homeowner can take that accrued savings with them and apply it to the market value of their new home.

Now, the county has to find a way to pay for the loss of revenue caused by the passage of Amendment 1, which Budget Director George Zoettlein expects to be $9.1 million.

Just where those reductions will come from will be the focus of a series of community meetings that kick off Tuesday in various parts of the county. The purpose of these community workshops is to obtain citizen feedback about county services and potential areas for budget reductions.

In our third and final part of this series, we will examine the county's contention that it has to do more with less. But will it?

Stay tuned.

Reporter Michael D. Bates can be reached at 352-544-5290 or mbates@hernandotoday.com.

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