POINCIANA — Wendy Farrell has been paying property taxes for a decade on her home in Poinciana, and as a small business owner in the community, would seem likely to be a solid supporter of Gov. Rick Scott’s push to cut property taxes in Florida as a way to spur economic growth.
The problem, though, is that Farrell, like many others in Central Florida, wouldn’t benefit from a property tax cut. That’s because as a British resident who came to Poinciana a decade ago on an E2 business investment visa, she doesn’t qualify for property tax breaks like the Homestead Exemption that Florida residents enjoy. Instead, as a business owner who is unable to get a green card, Farrell faces the full property tax bill.
“We don’t qualify for the homestead exemption — never have, never will, because we’re not green card holders,” Farrell said. “For 10 years we paid full property taxes, and it’s hard. It’s between $4,000 and $5,000 a year. We paid more on our street than our neighbors.”
In a region that’s attracted plenty of second home buyers and people looking for investment properties, those who are not able to claim Florida as their primary residence worry that property tax cuts will end up placing a much stiffer burden on their own tax bills. Farrell said a lot of British and other European property owners living in Central Florida clearly worry about this.
“It’s easy money (for the counties) when you’re on an E2 visa or you’re a foreign investor,” said Farrell, who runs Signature Promotions in Poinciana. “You don’t get a say on anything. It’s taxation without representation. We’re not allowed to vote, but we pay more than anyone else. It’s so unfair. There is no other way to describe it.”
It’s not just people who own a home but can’t claim Florida as their primary residence, Farrell said. Vacation homes – which are rented out on a short term basis, mainly to tourists and business travelers, rather than to long term tenants – also get hit with high property tax bills, she said.
“All the vacation homes pay full whack as well,” Farrell said.
The vacation home industry has grown substantially in the past decade, particularly in Northeast Polk County and Northwest Osceola County. There are now more than 20,000 vacation homes in Central Florida alone.
An Flamand is vacation home manager who runs USA Vacation Homes in Davenport. She countered that vacation homes often are located in close proximity to tourist spots, not residential areas, so the tax burden isn’t always that high.
“Often a lot of the vacation homes are not in residential areas, so they are not in the best school districts,” she said. “So they’re not in the really high property tax bracket, but it is still expensive for them because they don’t use the services that come from property taxes like schools and libraries. It is kind of unfair, but it is what it is. If you want to own a vacation home here, you have to live with the rules.”
That’s true, said Pete Howlett, a Realtor in Davenport who runs Orlando Vacation Realty and sells investment homes in the Four Corners area. He said it makes sense to give tax breaks to people who live here, rather than investors who don’t have a stake in the local community.
“We should have higher taxes for people who own second homes,” Howlett said. “I don’t have any real issue with the current system. I think the current system works. I think there should be a break for people that live here. I don’t really like to look at it as penalizing second homes or vacation properties. That’s just the cost of doing business.”
It’s unlikely that the Florida Legislature will go along with sweeping property tax relief this year, said state Rep. Mike Horner, R-St. Cloud, whose district covers parts of Central Florida with plenty of vacation homes.
“I support reducing property taxes,” Horner said, but added that lawmakers struggled with a way to pay for the property tax cuts while also balancing the budget, which was facing a $3 billion shortfall.
“I think that our top priority this legislative session is developing a balanced budget that does not contain any tax increases,” Horner said. “Our objective is to craft a balanced budget with no new taxes and no new fees, and that’s the budget we passed out of the House.”
That makes sense, Howlett said, since property tax relief would be difficult to finance at a time when tax revenues have been dropping due to the sluggish economy.
“I don’t know if cutting property taxes would hurt, but I don’t know how they would make up the difference,” he said. “Property taxes seem like a fair way to tax people.”
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