Here is the latest oddity out of Florida: Homestead-exemption tax break, intended for resident homeowners who actually live in their Florida homes, is instead accruing to the banks that are repossessing homes via foreclosure.

The Orlando Sentinel has the details:

Local governments across the state are losing revenue because banks are getting the homestead-exemption tax breaks intended for the homeowners whose properties the lenders have repossessed.

Homeowners qualify for Florida’s homestead exemption — a tax break intended for people who live in the house they own — on Jan. 1 of each year. Once a homeowner qualifies for the exemption, that property gets a tax break of at least $750, even if the house changes hands by the time its tax bill arrives in the fall.

The result: Banks are paying less in property taxes than they would otherwise because they inherit the previous owner’s homestead exemption when they foreclose on a property.

Another unintended consequence of a property tax break . . .


Cities, counties lose big bucks as banks get tax breaks on repossessed homes
Mary Shanklin
Orlando Sentinel, December 12, 2010,0,1849976.story

Category: Foreclosures, Real Estate, Really, really bad calls, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

15 Responses to “Foreclosure Tax Breaks Hurting Florida Cities/Counties”

  1. Petey Wheatstraw says:

    There is no problem that private industry couldn’t fix, if only the government would stay out of the way.

    FL elected Rick Scott. They recalled Alan Grayson. They continue swallow the corporatist bait, hook, line, and sinker. They get what they voted for and richly deserve. Dumb-ass crackers.

  2. Lugnut says:

    Bad legislation. Should have been written such that recipient could only be actual resident of house, and not a corporation.

    Of course, Washington being what it is, I’m sure it was written ‘correctly’

  3. Petey Wheatstraw says:

    Lugnut Says:

    “Of course, Washington being what it is, I’m sure it was written ‘correctly’…”

    This is FL law. Washington has nothing to do with it.

  4. like Lugnut..

    personally, color me Stupid, and not being from ’round there, but how do ‘Banks’/’Investors’ catch a “Homestead Exemption” ?

    O~Snap! “…The result: Banks are paying less in property taxes than they would otherwise because they inherit the previous owner’s homestead exemption when they foreclose on a property…”

    “Reading” Is Fundamental, afterall..

  5. wally says:

    How can you make an argument that this ‘hurts’… if the homeowner was still in the house, that’s the tax amount the government would have received. No harm that I can see.

  6. ComradeAnon says:

    Full disclosure: I didn’t read the linked article. When I bought our home in unincorporated Metro Atlanta, the school revenue portion (about 2/3 of total tax bill) was exempted as the previous owners age qualified. It was great until the next tax bill was due. Everybody wanted a lot more money immediately. Hopefully this break lasts for one tax cycle. But it’s still a lot of money that municipalities really need. They’ll need to revise closing/escrow/tax accessor procedures to reflect status of buyer. Or foreclosure(er)s.

  7. Petey Wheatstraw says:


    REO properties are houses, not homes. They are investment properties, not primary residences, and as such, the owners should be paying appropriate property taxes — not getting a tax break intended for resident homeowners.

  8. wally says:

    “as such, the owners should be paying appropriate property taxes”

    Where’s the harm? The government got exactly the tax amount it agreed to accept for that year.

  9. Petey Wheatstraw says:


    The harm: The government does not get the taxes they are owed. The owner-resident and owner-investor pay different tax rates. What the government AGREED TO was an exemption for the RESIDENT OWNER — not a back-door bail out for the investor/holder of a portfolio of RE investment holdings gone bad.


    Well, Mr. Smith, your estimated income for the year was $40K, but you got fired, and your replacement actually made $1M. We’re only going to tax him at the $40K rate, ’cause that’s what we agreed to when you had the job.

  10. wally says:

    “The government does not get the taxes they are owed.”

    Perhaps technically, but to complain that you didn’t get a windfall seems to be a weak argument.

  11. rktbrkr says:

    The law was written exactly as the banks directed. Same as MERS was designed to shortstop municipalities from tax revs – even if it produced questionable titles for the homebuyers.

  12. Mannwich says:

    No property tax break in Minneapolis. Property taxes up 10-18% in ’11. Mine went up 10%, so at least I’m on the lower end.

  13. USSofA says:

    Wally is right…
    The tax revenue is already baked in the cake as far as the county budgets in Florida go. The homestead exemptions are accounted for in the budgeting process regarding assessed valuations. If new owners (banks) lost the exemption at the time of the title transfer/ foreclosure, it would be a windfall for the County/State.
    I understand that the State needs the revenue, but that’s not how the system works.
    In my view, as a Florida homeowner and recipient of the homestead law’s largess I honestly think this is one of those well intended ideas that was great in theory and terrible in practice. Like so much else that is wrong in real estate markets, this law skews the free market price and need to go away. There, I just shot myself in the foot.

  14. phb says:

    I suspect the “dumb-ass” crackers, as Petey above so eloquently stated above, probably were not paying much in taxes as their home worked its way through the foreclosure process. Therefore, when the nasty ol’ banks took ownership and paid taxes current. Likely the county sees an increase in revenue not a decrease on those homes as the Orlando Sentinel reports.

    The unintended consequence in this case is that ‘homeowners’, while waiting around for a foreclosure process, results in little or no property tax being paid. Its still a problem, but one of omission rather than commission on the part of the bank. Clear out the glut of foreclosed homes and property tax, even homesteaded, returns to some point of equilibrium.

  15. sailorman says:

    The Homestead credit has to be renewed each year. Once it is renewed, it applies for the rest of the year regardless of the owner. A bank can not renew the homestead, so the discount applies from the date of the foreclosure until the end of the tax year.

    The homestead credit reduces the accessed value by $50,000; it’s not a big deal on an expensive house, but it can be a huge percentage on small houses.