What to Expect at the Final Value Adjustment Board Meeting


So you finally received a decision from the Special Magistrate and, whether you won or lost, at least your VAB appeal is over and done with, right?  Not quite. For those Florida counties that employ Special Magistrates, the recommendations of the Special Magistrates are just thatrecommendations.  Florida Statute 194.035 authorizes the value adjustment boards to accept those recommendations without further hearing, but the ultimate authority to grant or deny a petition rests with the VAB, which consists of two county commissioners, a school board member, and two citizen members.

In most counties, the final VAB meeting is not particularly exciting.  Unless they have a question about a particular petition, the VAB members will usually move to approve all of the recommendations of each Special Magistrate as a group, without any discussion.  The Special Magistrates usually attend the final VAB meetings in case the Board members have a question, and occasionally Board members will ask a Special Magistrate to further explain their recommendations.   There is usually no opportunity for the taxpayer or Property Appraiser to re-argue their position as to a particular petition, although the Board will often have an open “public comment” session at the end of the meeting, after they have rendered their decisions.

Of course, there are exceptions.  Some county value adjustment boards have adopted procedures whereby the taxpayer or Property Appraiser can file written objections to a Special Magistrate’s recommendation, as long as they limit their objections to legal issues, and do not try to introduce any new evidence.  Other VABs allow Property Appraisers and petitioners to orally address the Board and object to adverse Special Magistrate recommendations at the final VAB meeting.

In general, even in counties where the VAB allows for oral or written objections, the parties are not allowed to introduce new evidence that was not presented at the hearing before the Special Magistrate. In fact, an appellate court recently held that a VAB did not have authority to hold a rehearing and allow new evidence to be presented after it had accepted the Special Magistrate’s recommendations.  This case does not necessarily preclude a VAB from rejecting a Special Magistrate’s recommendation and holding its own evidentiary hearing.  However, such a scenario is highly unlikely in most counties, as the VABs tend to defer to the expertise of the Special Magistrates.

After the final VAB meeting, the Clerk has 20 days to issue the final Record of Decision for each petition.  Taxpayers who are not satisfied with the decision of the VAB can file an action in circuit court, but such actions must be filed within 60 days after the decision was rendered by the VAB.   Actions challenging the denial of a homestead exemption must be filed no later than 15 days after the VAB renders its decision.  These deadlines are jurisdictional requirements that cannot be waived, so if you are considering filing a court action, it is essential that you contact an attorney as soon as possible, as failure to meet the deadline will result in dismissal of your court case.

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Responding to Requests for Financial Data from the Property Appraiser


If you own commercial property, especially hotels/motels, apartment buildings, self-storage facilities, or other property that is commonly rented, you have probably received a request from the county Property Appraiser for your property’s income and expense data.  This post will explain why the Property Appraiser seeks this data, how it is used, whether you are required to respond, and the consequences for failure to respond.

Why does the Property Appraiser need my financial information?

Commercial property is commonly assessed by what is referred to as the “income approach.”  In a nutshell, the value of the property is determined by capitalizing the property’s net operating income from the prior year.  In order to determine a reasonable amount of revenue and expenses for each commercial property, the Property Appraiser’s office requests that the property owners provide that data, which is then analyzed and used county-wide.

Will my financial information be treated as confidential?

Yes, for the most part.  Fla. Stat. 195.027 authorizes the Property Appraisers to seek taxpayers’ financial records, but states that the financial information is confidential in the hands of the Property Appraiser, except upon court order or order of an administrative body having quasi-judicial powers in ad valorem tax matters.  Thus, in most cases, your information will be kept confidential.

However, if another owner of income-producing property were to take the Property Appraiser to court over their assessment, they could conceivably ask the court to order the Property Appraiser to produce any income data that they used to assess the property, including data received from other taxpayers.  Of course, in my experience, if a judge is going to order the Property Appraiser to produce confidential taxpayer data, they will usually allow the Property Appraiser to redact any identifying information.

Also, if you challenge the Property Appraiser’s assessment of your own property in court or before the Value Adjustment Board, the Property Appraiser will in all likelihood want to use any previously-provided data in their defense.  There has been some disagreement as to whether the Property Appraisers can do so without a court order, but in such a situation the court would in all likelihood allow the Property Appraiser to use your data in court.

What happens if I refuse to respond?

If a taxpayer does not voluntarily provide their financial records to the Property Appraiser, the Property Appraiser has the authority under Fla. Stat. 195.027 and Florida Administrative Code Rule 12D-1.005 to file an action in circuit court requesting a subpoena duces tecum directing the taxpayer to produce the records.  However, this procedure is used very rarely.  Usually, if a taxpayer does not respond, the Property Appraiser will just assess their property using the best available information, such as information provided by owners of similar property in the area or data from national publications.

The most serious consequence of failing to respond is that you essentially forfeit your ability to use that data to challenge your property tax assessment, even if your own income and expenses would result in a lower value.  Years ago, the Supreme Court of Florida in Palm Corporation v. Homer held that a taxpayer who refused to provide their income data to the Property Appraiser could not use it in a later lawsuit to challenge the Property Appraiser’s assessment.

Can I wait until I receive my Trim notice to decide whether to respond?

In Higgs v. Good, the taxpayer did just that and the appellate court held that he could not use his income data in a court action to challenge the Property Appraiser’s assessment.   Basically, the Property Appraiser needs this information in the spring in order to use it in the assessment process, since the tax roll must be completed by July 1st.  The courts have thus found that it is unreasonable to withhold financial data until after the assessments are completed and then submit it only if it suits the taxpayer (i.e. if it would indicate a lower value).

That said, the Florida Department of Revenue has recently raised quite a ruckus by stating in its proposed 2010 VAB Training Materials that, in the Value Adjustment Board process, as long as the taxpayer submits their evidence to the Property Appraiser 15 days before the hearing, it should be considered timely, regardless of when the data was requested.  This proposal has no doubt received a lot of negative commentary from the Property Appraisers, as it appears to ignore the court ruling in Higgs v. Good.  But unless this is changed, it is possible that, beginning in 2010, taxpayers may have the option of withholding their income data until they receive their TRIM notice.  Although they would not be able to use that data in court, the DOR’s materials may allow them to use that data in a VAB hearing.

Qualifying for a Florida Homestead Exemption


The March 1st deadline to apply for a Florida homestead exemption is rapidly approaching.  If you moved to a new home within the last year, this is a deadline you do not want to miss.  This article will explain the benefits of the Florida homestead exemption, the requirements for an exemption, how to apply for an exemption, and what to do if your application is denied.  It will also address some of the thornier issues, such as rental of homestead property and claiming multiple exemptions per family.

Benefits of a Homestead Exemption

There are numerous financial benefits to having a homestead exemption on your property.  On the most basic level, the homestead exemption itself entitles most homeowners to a deduction of $25,000 off of their property’s assessed value, which can result in several hundred dollars in tax savings.  If your home is worth at least $75,000, you will receive an additional $25,000 deduction from your assessed value, although that additional deduction will not apply to school tax levies.  Once you establish your right to a basic homestead exemption on your property, you may also qualify for additional homestead exemptions if you are over 65 years old or have a disability.  But perhaps most importantly, receipt of a homestead exemption means that, pursuant to the Save Our Homes Amendment to the Florida Constitution, the assessed value of your homestead property cannot increase more than 3% per year or the percent change in the Consumer Price Index.  Moreover, in many cases, this tax savings can  now be transferred to a new Florida residence if you move.  Thus, while the basic homestead exemption may only save you a few hundred dollars per year, the rights that come with a homestead exemption can be extremely valuable.

How to Apply for a Homestead Exemption

Homestead exemption applications must be filed with the county Property Appraiser by March 1st of the tax year for which the exemption is sought.  Thus, in order to receive a 2010 homestead exemption, you must apply by March 1, 2010.  If you acquired or moved into your new home after January 1, 2010, then you would not qualify for a 2010 homestead exemption, but you can go ahead and apply now for a 2011 homestead exemption.   If you already have a homestead exemption, you probably do not need to re-apply, as most counties use an automatic renewal process, whereby you only need to notify the Property Appraiser if you are no longer entitled to the exemption.

What property qualifies for a homestead exemption?

Pursuant to Fla. Stat. 196.031, in order to qualify for a homestead exemption, as of January 1st of the tax year in question, you must have either legal or beneficial title to the property for which you are seeking an exemption, and the property must be the permanent residence of either yourself or someone who is legally or naturally dependent on you.  Thus, the property can be owned by a trust, as long as the applicant retains beneficial title and a possessory interest in the property.  However, the homestead exemption may not be claimed by a corporation.

The property must also be you or your natural dependent’s “permanent residence,” which is defined by Fla. Stat. 196.012(18) as “that place where a person has his or her true, fixed, and permanent home and principal establishment to which, whenever absent, he or she has the intention of returning.”   In determining whether the property is your permanent residence, the Property Appraiser may consider a number of  statutory factors, including but not limited to the existence of a formal declaration of domicile, where your children are registered for school, your place of employment, residency in another state, the address where you are registered to vote, the address on your driver’s license or identification card, vehicle registration, the address on your federal income tax returns, the address on your bank statements, and proof of payment for utilities at the subject property.

Also, the homestead exemption only applies to that portion of the property that is classified and assessed as owner-occupied residential property.  Thus, mixed-use properties may only receive the homestead exemption benefits on a portion of the property.

Can a taxpayer claim more than one homestead exemption?

No.  In fact, Fla.Stat. 196.031 prohibits anyone who receives the benefit of a residency-based property tax exemption or tax credit in another state from also receiving a Florida homestead exemption.  Thus, not only can you not claim two Florida homestead exemptions, but you also cannot claim an additional residency-based exemption in another state.

Can my spouse claim a separate homestead exemption on property that they own independently?

Possibly.  The Florida Constitution only allows for one homestead exemption per family unit.  While the proper interpretation of “family unit” could, and likely will, take up an entirely separate article, most Property Appraisers interpret this provision to mean that a married couple can only receive one homestead exemption.  The Attorney General’s office and some trial courts have interpreted this provision to occasionally allow for separate homestead exemptions where the couple is separated or can prove financial independence.  However, not all Property Appraisers agree with this interpretation and this issue continues to wind its way through the courts.  Anyone who plans to try to obtain separate homestead exemptions should seek the advice of an attorney in order to avoid potentially costly penalties in the future.

Can I still receive a homestead exemption if I rent my property?

Possibly.  Fla. Stat. 196.061 provides that the rental of an entire dwelling constitutes the abandonment of that dwelling as a homestead.  However, under the Florida Constitution, the ultimate issue is whether the property was your permanent residence on January 1st of that tax year.  In recognition of that fact, the statute contains an exception, which states that abandonment of a homestead after January 1st of any year shall not affect that year’s homestead exemption as long as the property is not abandoned after January 1st for two consecutive years.  Thus, a snowbird who heads up north for the summer could conceivably rent their property every other year during the warmer months without losing their homestead exemption.

But isn’t it okay to rent homestead property, as long as you don’t rent it for more than 6 months?

No.  The confusion on this issue came about because, pursuant to Florida Statutes 196.081, 196.091 and 196.101, certain disabled veterans and other totally and permanently disabled persons are entitled to a complete exemption from all property taxes for their “real estate that is used and owned as a homestead.”  Florida Statute 196.012(13) then defines this phrase “real estate used and owned as a homestead” as the person’s homestead property, less any portion thereof used for commercial purposes.  The statute then states that “property rented for more than 6 months is presumed to be used for commercial purposes.”

In effect, if a permanently disabled veteran used a portion of their homestead property for commercial purposes, such as by renting a room or using a portion of the property for a home office, they would not receive a complete tax exemption on that portion of the property, although they would arguably still be entitled to the homestead exemption on the entire property.  In the author’s opinion, this definitional statute applies only to the total exemption for certain disabled persons, and not to the basic homestead exemption.  However, some Property Appraisers apply the 6 month rental limitation in their homestead exemption determinations, and a recent appellate decision may add fuel to that argument.

Conversely, just because the property is presumed to be used for commercial purposes if rented for more than 6 months does not mean that you can safely rent your property for less than 6 months without losing your homestead exemption.  As discussed above, your right to a homestead exemption is determined as of January 1st.  Thus, rental of homestead property on January 1st of any tax year, even for a few months, is a risky move.

Appealing a Denial of Your Homestead Exemption Application

The Property Appraisers are required to notify taxpayers by July 1st if they plan to deny their application for a homestead exemption for that tax year.   Fla. Stat. 194.011 then gives the taxpayer 30 days to file a petition to the county Value Adjustment Board.  Please note that if the Value Adjustment Board denies your petition, you have only 15 days in which to file an appeal to the circuit court.  See Fla. Stat. 196.151.  If you do not want to file a petition to the VAB, you can file an action directly in the circuit court, but such a lawsuit must be filed within 60 days of certification of the tax roll.

Homestead Portability: Transferring Your Homestead Cap to Your New Home


In Florida, the Save Our Homes Amendment to the Florida Constitution prevents the assessed value of homestead property from increasing more than 3% per year, or the percent change in the Consumer Price Index, whichever is lower.  While the tax savings from the Save Our Homes Amendment has no doubt helped many homeowners to stay in their homes even when values were rising, it also tended to discourage homeowners from moving to a new residence, for fear of giving up all of their accumulated property tax savings.  In 2008, Florida voters attempted to change that by amending the Florida Constitution to allow for “portability” of their accumulated homestead exemption tax savings.  This article will explain the basics of how to “port” your Save Our Homes tax savings to your new residence, and will address some of the more complicated situations that can arise, particularly when more than one owner is involved.

Portability Basics

The rules regarding portability are set forth in Florida Statute 193.155(8).  Essentially, a homeowner may “port” their Save Our Homes tax benefits to their new home as long as they establish their new homestead within 2 years of abandoning their previous homestead.  More specifically, in order to qualify for portability in a given tax year, the homeowner must have received a homestead exemption on their previous homestead in one of the last two tax years.  If the new homestead is more valuable than the old homestead, the homeowner may port up to $500,000 of capped value to their new homestead.  For example, suppose your old home was worth $350,000, but was assessed at only $250,000 due to the Save Our Homes Amendment (a $100,000 cap differential).  If you were to move to a new home worth $500,000, that home would be assessed at no more than $400,000 in the first year, with subsequent increases limited to 3% per year, or the percent change in the CPI.  If you move to a less valuable home, the amount of cap differential that you may port will be limited to your old home’s assessed value divided by its just value.  For example, if your old home was worth $500,000, but was assessed at $400,000, and you move to a less valuable home, the new home will be assessed at 80% of its just value the first year, as long as the cap differential does not exceed $500,000.

In order to port Save Our Homes benefits, when filing an application for a new homestead exemption, you must also file Form DR-501T, for Transfer of Homestead Assessment Difference by March 1st of the year you intend to establish a new homestead.

Portability When Combining Households

If two people who each have their own homestead decide to acquire a new homestead together, the Property Appraiser will use whichever prior homestead would result in the highest cap differential, and thus the highest tax savings.  However, once again, the cap differential may not exceed $500,000.

Portability When Abandoning Joint Property

When joint owners abandon homestead property and acquire new, separate homestead properties, the cap differential that they are allowed to port is calculated as described above.  However, the cap differential is then divided by either the number of owners of the prior homestead or, in the case of property owned as tenants in common, by each owner’s proportionate interest in the prior homestead.  For example, if two joint owners would be allowed to port a $100,000 cap differential to the same new residence, if they move to separate new residences, they would each be permitted to port $50,000.

Challenging Portability Decisions

A taxpayer may not challenge the assessment of their prior homestead property in a prior year, as that would be contrary to the requirement in section 194.171, Fla. Stat. that all tax assessment challenges be brought within 60 days of the certification of the tax roll or the decision of the VAB.  However, pursuant to Florida Statute 194.011(6), if a taxpayer disagrees with the Property Appraiser’s determination of their entitlement to portability or the amount they are allowed to port, they can file a Form DR-486PORT petition to the Value Adjustment Board where their new home is located.  The VAB where the new residence is located will then submit a notice to the VAB of the county in which the taxpayer previously resided and that VAB will hear the petition and render a decision.  The decision of the VAB in the previous county will be submitted to the VAB in the new county, which will consider that decision in rendering its own final decision (yes, I know – I never said this was a simple process).  If a taxpayer disagrees with the decision of the VAB, they may appeal the decision to the circuit court of the county in which their new homested is located, and that proceeding shall be de novo.

Obtaining “Working Waterfront” Classification for Florida Property Tax Purposes


In 2008, Florida voters amended the Florida Constitution to allow “working waterfront” properties to be assessed based on the current use of the property, as opposed to the highest and best use of the property.  Pursuant to Amendment 6, waterfront land used for commercial fishing, public boat launches, marinas, drystacks, and water-dependent marine manufacturing and repair facilities can no longer be assessed at its fair market value, which often represents the value of the property for a more-intensive use, such as for a hotel or condominium project.  Instead, the property must be assessed based on its actual use as of January 1st of each tax year, beginning with the 2010 tax year.

Sounds great, right?  Well, the bad news is that, despite the approval of this amendment by the voters, the Florida legislature has yet to pass any enabling legislation to define the types of properties that qualify or, more importantly, to provide a procedure for applying for and receiving classification as a working waterfront.  Oops.  The Senate considered SB 1468, which would have required taxpayers to apply for working waterfront classification by March 1st of each year, unless the counties waived the annual application requirement, but that bill died in committee.

In July 2009, the Florida Department of Revenue issued an informational bulletin, PTO 09-24, advising the county property appraisers that, because this constitutional provision is self-executing, working waterfront properties are entitled to be assessed at their actual use beginning in the 2010 tax year, regardless of the lack of enabling legislation.  Thus, while some property appraisers may disagree with the DOR and decide not to apply the constitutional amendment until the legislature passes enabling legislation, I expect that most counties will try to begin implementing the new law this year.

So, absent any procedures or forms for taxpayers to use in applying for working waterfront classification, how should one go about seeking this classification?  Some property appraisers may choose to develop county-specific procedures for taxpayers to use in their jurisdiction, but others may not.  The important thing to remember is that the property appraisers’ systems will generally not automatically recognize which properties qualify as working waterfronts.  So, if you believe your property qualifies for this classification, you should contact your county Property Appraiser and make sure that they are aware of how your property is being used, and that they have all of the information they need about your property to assess it based on its actual use.

Department of Revenue Clarifies VAB Hearing Procedures


The Florida Department of Revenue recently issued Property Tax Oversight Bulletin 09-29, which clarifies the order of presentation of evidence and other procedural issues that have arisen in the 2009 Value Adjustment Board hearings.  Among other things, the bulletin explains that:

  • The first issue to be considered at the VAB hearing is whether the Property Appraiser’s assessment will be presumed correct.
  • In determining whether the Property Appraiser’s assessment is presumed correct, the Property Appraiser should be required to present their evidence first.
  • Evidence regarding the general appraisal practices of the Property Appraiser’s office or approval of the tax roll by the Department of Revenue is insufficient to establish the presumption.  The Property Appraiser must explain how those practices were applied to the specific property at issue.
  • If the Property Appraiser does not present evidence on this issue, or if the presumption is otherwise lost, the VAB may establish the value or remand to the Property Appraiser for a reassessment.
  • Regardless of whether the Property Appraiser retains the presumption of correctness, the taxpayer still has the right to a determination of the appropriateness of the Property Appraiser’s appraisal methodology.

Do VAB Special Magistrates Have Authority to Remand for a Reassessment?


It’s time for me to get on my soapbox about a big blunder the Florida Department of Revenue made in its new VAB forms and proposed rules.  Okay, so there was probably more than one blunder, but this one sticks in my craw because I filed a public comment and apparently nobody paid any attention.  The blunder I’m referring to is the authority apparently bestowed on the Special Magistrates by the DOR to order Property Appraisers to revise their assessments.  The Florida statutes allow the circuit court or value adjustment board to remand for a reassessment under appropriate circumstances, but the Special Magistrates plainly do not have any statutory authority to issue an order directing the Property Appraiser to change their assessment.

Florida Statute s. 194.301 provides that if the Property Appraiser’s assessment is overturned and the record lacks substantial competent evidence of value, the matter must be remanded to the property appraiser with appropriate directions from the value adjustment board or the court.  While the VAB is authorized by Florida Statute 194.035 to appoint special magistrates for the purpose of taking testimony and making recommendations to the board, the final decision as to whether to overturn the assessment and, if so, whether to set the value or remand to the Property Appraiser for a reassessment, is a decision for the board.  The Board can act on the recommendations of the Special Magistrate without further hearing, but nothing in the Florida statutes suggests that Special Magistrates have any authority to directly order a Property Appraiser to reassess property.

So why then did the Department of Revenue promulgate a form (Form DR-485R) that invites the Special Magistrates to order the property appraisers to reassess property even before the VAB has determined whether the original assessment is valid?  And why do the DOR’s proposed Rules provide procedures for the Special Magistrates to remand an assessment to the Property Appraiser without prior approval of the Value Adjustment Board?  I cannot answer these questions, but I will say that the proposed regulations are clearly beyond the DOR’s rulemaking authority.

Comments on the DOR’s proposed rules can be sent to VAB@dor.state.fl.us or you can call the DOR at (850) 922-7945.