Florida Property Tax News: Legislature Provides Tax Relief on Homestead Property Damaged or Destroyed by Misfortune or Calamity, Including Hurricanes

It’s an ill wind that blows no good.
--English proverb

The ill winds of Hurricane Katrina and Hurricane Wilma at least motivated the Florida Legislature to provide property tax relief to homestead residents. In rebuilding homestead property, no additional assessment valuation will be added to homestead property if the square footage is increased by 10% or less or if the building is rebuilt to 1,500 square feet or less.

This statutory amendment provides relief only where all or a portion of homestead property is damaged or destroyed by misfortune or calamity. Voluntary demolition and rebuilding not precipitated by misfortune or calamity does not qualify.

If, however, the damage or destruction of the homestead property results from misfortune or calamity, either of two circumstances will qualify for the relief provided. Because misfortune and calamity are not defined by the statute, it may safely be assumed that these terms will be applied by the courts in accordance with dictionary definitions, unless and until such definitions are narrowed by State Department of Revenue regulations.

Thus, misfortune and calamity may reasonably be understood to include fire, tornado, hurricane, flood and what are frequently referred to in legal documents and literature by the apparently faith-based terminology of “acts of God.”

Given the threshold requirement of misfortune or calamity, tax relief is provided by the Legislature under either of two separate sets of circumstances.

First, if the square footage changed or improved because of the misfortune or calamity does not exceed 110 percent of the square footage before the damage, no additional valuation will be added to the tax assessment roll for the homestead property in question.

In the alternative, and irrespective of the 110% rule, the assessed value shall not increase if the total square footage of the property after it is changed or improved does not exceed 1,500 square feet. This means that even if the house was, say, 1,000 square feet before the misfortune or calamity, rebuilding it to 1,500 square feet will not increase the taxable value. This is noteworthy from a practical standpoint, since it means even an increase of a full 50% or more in size, providing the end result measures 1,500 square feet or less, does not increase the tax base for the homestead property.

These two new statutes are also interesting from a constitutional standpoint. The Florida Constitution provides that all property must be assessed at market value, unless expressly provided otherwise in the Constitution. Market value means the amount that a willing buyer will pay to a willing seller, both fully informed as to the circumstances, and neither under duress to make the transaction.

The question that naturally arises is the following one. Will a 1,000 square foot house have the same market value as a 1,500 square foot house, all other things being equal? Clearly, the answer is no. as with many constitutional questions, this one may never be raised. Remember, legal eagles, only a person with a legally cognizable injury, otherwise known as standing, is authorized to pursue a lawsuit. Intellectual curiosity does not confer standing.

In summary, this new law provides that changes, additions, or improvements that replace all or a portion of homestead property damaged or destroyed by misfortune or calamity shall not increase the assessed value of the homestead if the square footage changed or improved does not exceed 110 percent of the square footage before the damage. Also, the assessed value shall not increase if the total square footage of the property after it is changed or improved doesn’t exceed 1,500 square feet.

The change allows for rebuilding homestead property damaged or destroyed to a total size of 1,500 square feet without any assessment increase. For such buildings the homestead property's assessed value shall be increased by the just value of that portion of the changed or improved homestead property that exceeds 1,500 square feet. That would in effect eliminate the 110 percent rule for properties of less than 1,500 square feet.

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Daniel A. Weiss is a former Attorney Special Master for the Miami-Dade County Value Adjustment Board with over 25 years property tax experience. Mr. Weiss represented the Miami-Dade County taxing authorities in litigation and appeals between 1981 and 1995 and has since represented taxpayers in property tax matters. Mr. Weiss was named one of the top lawyers in real estate, zoning and land use by South Florida Legal Guide 2007. In Florida Super Lawyers 2006, Weiss was named one of the top 6 local government lawyers in South Florida.

In Florida Trend magazine™'s Legal Elite's issue, July 2004, Mr. Weiss was selected by his peers as one of the top 30 government lawyers in the State of Florida.

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