- A Florida law caps property taxes at 3% a year for existing homebuyers.
- But new homebuyers are paying thousands more than the previous homeowners.
Earlier this year, Eugene Bednarski, 59, paid his usual $1,600 in property taxes to Pasco County, Florida — north of Tampa on the western coast of the state — without a second thought.
But in May, there was a surprise in the mail: a new bill showing the tax obligation on the house was now more than three times the original amount.
After digesting the initial shock, Bednarski realized the new bill was a mistake. The government thought the property was eligible for the higher assessment because it had traded hands. In fact, the change in the home's title was due to his divorce, not a sale, so the issue was corrected.
"I would have been flirting with $5,000 per year," Bednarski told Insider.
But many Floridians won't be so lucky.
Rising property taxes have been causing a stir across the Sunshine State — especially for those who flocked to Florida over the past couple of years to escape exorbitant taxes in other states. Unlike Bednarski, most will have little recourse but to fight their local municipalities over the bigger bills. The unexpected costs have prompted regret in some people over moving in the first place — and some even have plans to sell their newly acquired homes and leave the state.
Anyone who bought a Florida property in 2022 will be in the same situation next year. With Florida's overall appraised home values skyrocketing by 26% between 2021 and 2022, according to an analysis of state data, those buyers could owe thousands more in property taxes than the previous owners of their homes.
In the Sunshine State, property-tax increases fall largely on first-time homebuyers or people who move from another state. That's thanks to a state constitutional amendment from the 1990s called Save Our Homes that caps local property taxes for existing homeowners at 3% per year, or the change in the consumer price index if it's less than 3%. The cap also applies to existing Florida homeowners who move to a new primary residence anywhere in the state.
The goal of the measure was to make living in Florida affordable, according to residents and experts familiar with the law.
Over the past three years, the share of tax dollars that has been exempt from a non-capped increase has declined, according to data from the Florida Department of Revenue, possibly because of the influx of new Floridians, many of whom were looking to escape tax-heavy states like New York and California,
People are moaning about tax bills they didn't expect
Meanwhile, outrage over the elevated tax bills is flooding the airwaves and social media.
Earlier this year, Robert Walsh, a Broward County resident, saw his taxes for a Fort Lauderdale duplex surge from $5,000 a year to $13,000 a year, CBS reported.
People are also venting on a 13,500-person Facebook group for people moving out of Florida, with one member claiming his property taxes surged from $3,800 to $8,200. If he could not get his taxes lowered, he was pondering "putting his house up for sale" and "moving a little up north," wrote the person, who didn't respond to Insider's request for comment.
Matt Simmons, a managing partner at the Fort Myers-based appraisal firm Maxwell, Hendry, and Simmons, who helps homebuyers appeal valuations, said regret can set in unless people have properly researched the costs of owning a home in Florida.
"It can really be a stark difference from someone's tax bill who just sold to the next tax bill of the new buyer," Simmons told Insider. "Enough so that it would change the needle on whether they would have bought or not."
Corporate homebuyers are also getting hit with higher tax bills
Deeply resourced, large-scale homebuyers are getting caught off guard, too.
Invitation Homes, which owns more than 80,000 single-family rentals nationwide, last month said its tax bills could rise as much as 8% in 2022, about 3 percentage points more than it expected, according to a Seeking Alpha transcript of the company's third-quarter-earnings call.
Assessments in Florida and Georgia rose a staggering 30% on average, Ernie Freedman, Invitation Homes' chief financial officer, said on the call.
"We're going to appeal more than we ever have in the past, especially in those two states," Freedman said.
The concerns of big investors carry over to Texas, another state that saw increased demand for housing during the pandemic.
American Homes 4 Rent, a firm that invests in single-family-rental homes, projected its property taxes in the Lone Star State would rise by more than 20% after hearing "surprising and disappointing news" about its obligations, the chief financial officer, Christopher Lau, said on the company's third-quarter-earnings call.
The bills jumped even after Texas passed legislation in 2019 to cap property-tax revenue growth for cities, counties, and certain special districts, Lau said.
Some local governments in Texas have argued for increasing property taxes in order to finance things like hurricane relief, the Texas Tribune reported.