Indian River County got much more valuable over the past year. The dollar value of property taxed to fill the county’s general operating fund jumped nearly $3 billion, from $23.3 billion to $26.2 billion, a bracing 12.4 percent increase, according to estimates released this month by Property Appraiser Wesley Davis.
The tax roll numbers are impressive – $26 billion worth of real estate isn’t bad for a small, mostly rural county with a population less than 165,000. It translates to more than $150,000 worth of real estate for every man, woman and child, and many of the dogs and cats.
But the taxable values are only part of the iceberg. The actual value of real estate in the county is likely twice what the tax rolls reflect, more like $50 billion, with a $5- or $6-billion increase from last year, though there is no official number.
Homestead exemptions are the biggest reason for the discrepancy between taxable and actual value. Most people are familiar with the $50,000 break residents get for a home they live in fulltime. If the appraiser values a house at $300,000, the owner only pays taxes on $250,000 if it is homesteaded. Just that protected value amounts to several billion dollars that don’t show on the tax roll.
But much more value is “concealed” by the Save Our Homes amendment to the Florida constitution that was approved by voters in 1992 and went into effect in 1994. That amendment and subsequent legislation limit the increase in taxable value for homesteaded properties to 3 percent a year, for the most part, and 10 percent a year for non-homesteaded properties.
In a booming real estate market like we have had in the past several years, in which property prices have increased by 50- or 100-percent or more in many cases, a huge amount untaxable value quickly builds up on the ledger.
Here are couple of examples pulled at random from the property appraiser’s highly functional and transparent website, which allows anybody who’s interested to look at property tax details:
A house in Wave Three of Castaway Cove was valued by the appraiser’s office in 2022 at $1,320,287, but after homestead exemptions were applied, the taxable value was reduced to $978,454. A home in the 800 block of Riomar Drive was valued at $2,870,398 by the appraiser last year, but with homestead exemptions, only $2,062,867 was taxed. And a house on Ocean Drive valued at $6,474,030 had a taxable value of only $4,303,477 last year, due to homestead protections.
For just those three houses, which are not abnormal in beachside neighborhoods where home prices skyrocketed in recent years, that leaves more than $3.25 million in phantom value not included in the $26-billion tax roll.
Altogether, the basic $50,000 homestead reduction and the Save Our Homes damper on value increases excludes more than $10 billion in value from taxation, according to Davis’s office, raising what that office calls the Just Value of real estate in the county to more than $40 billion.
But there’s still more value that remains hidden.
Davis chief deputy, Mickey Umphrey, told Veronews.com in an email that there are “44 lines of calculations on each property that are not included in the numbers above . . . there are exemptions and many other calculations in the 44 lines of the state report that alter the total.”
Using last year’s school board numbers as an example, he said that taxable value for the school board was $25.7 billion, with $7 billion in homestead exempted value not included in that figure.
At first glance, that seemed to show the total value of property taxed to support the school board was $32.75 billion, slightly more than the general fund, but according to Umphrey, “adding the other 44 lines of calculations, the [actual] school board total Just Value was $37.5 billion.”
So those 44 lines would appear to add billions more to the actual value of land and buildings in Indian River County.
On top of that, there is another huge but uncalculated factor that reduces the ratio of taxable value compared to actual market value.
The three houses mentioned above illustrate this differential. The house in Castaway Cove that was valued at $1,320,287 before exemptions in 2022 sold last June for $2.55 million, nearly double the official figure, while the home in the 800 block of Riomar Drive, which was assigned a value of $2,870,398, sold last June for $5.1 million. And the house on Ocean Drive valued by the appraiser’s office at $6,474,030 sold for $13.9 million, more than twice the assigned value.
So some value was missed last year. The county valued the three homes at $10.7 million in 2022, with a combined taxable value of $7.34 million, but the live real estate market valued the properties decisively at $21.5 million, nearly three times the taxed value.
This year, prices have continued to go up, 11 percent during the first four months of the year compared to last year, an increase that is hard to accurately assess in the short term and is only partially reflected in the current tax roll estimate.
None of which should be taken as criticism of the property appraiser’s office, where valuations are necessarily backward looking. Davis and Umphrey lead a staff of 38 professionals who work year round to update values and pave the way for fair and accurate taxation. But they are operating in a complex matrix of state laws and fast-moving market conditions that create an inevitable time lag in valuations.
They are on the lookout for tax cheats, such as people who claim homestead exemptions they are not entitled to, but also want to give taxpayers every break they are entitled to, which include exemptions for widows, disabled people, members of the military, charitable groups and certain types of farmland.
Since all three of the houses mentioned above were sold last year, setting a new benchmark in the homes values and shedding the Save Our Homes reserve, much of the value that was missing from the books in 2022 is included in this year’s higher numbers. And the appraisers and analysts in Davis’s office captured much of the increase in the value of other houses in island and mainland neighborhoods, based on the sales prices of houses that changed hands, but they have to be careful and certainly did not capture all of it.
The bottom line is the value of real estate in Indian River County is much higher than shown in the tax rolls and the increase in value from last year to this year was huge – which is good news for all concerned.
Davis will issue an updated tax roll on July 1 that will become the basis for city, district and county budgets.
If property tax rates stay the same, all the governments and agencies will have more money than last year because of the increase in the value of what will be taxed.
Each entity will calculate its expected expenses and decide on that basis if the windfall is sufficient to pay the bills during the upcoming year, factoring in inflation and increased demand for services from a growing population.
If the county commission, city councils and other boards decide they need more money, they can raise the tax rate, also called the millage rate, to pay for police and fire protection, schools, roads, parks and other services.
They could also lower the millage rate if they think the windfall from increased real estate values will surpass budget needs. That might seem like a longshot, but in fact the overall millage rate was reduced last year by responsible officials, from 14.5 to 14.0 in the wake of another big jump in property values.
The numbers mean that property owners paid approximately $14 for each $1000 worth of taxable real estate value.
In part because Florida does not have an income tax, “Indian River County has one of the highest median property taxes in the United States, ranked 576th of the 3143 counties in order of median property taxes,” according to taxrate.org.
Despite that, IRC ratepayers can take solace in knowing they pay lower taxes than their neighbors in adjoining counties
All told, property taxes on a $300,000 home in Indian River County will run you about $4,632.00, while the tax bill on the same house in Brevard County will be $4,681.00, according to Floridataxwatch.org. In St. Lucie, which has the highest property tax rate in the state according to the same source, the taxman will send a bill for about $6,856.00.
Taxes based on property valuation were introduced in Florida in the 1830s, when the area was still a territory. The first homestead exemption of $5,000 became state law in the 1934, the same year property tax assessment and collection was shifted from the state to the counties, according to the Florida League of Cities.
In the 1990s, the Save Our Homes amendment capped how fast property taxes can increase and in 2008 the homestead exemption was upped to $50,000. At the same time, a limit was placed on property tax increases for non-homestead properties and “portability” was added to the equation, allowing homeowners to take their protected value from one house to another when they move.
It is a complicated and sometimes confusing system that takes experts like Davis and his team to navigate but it pays the bills, providing the vast majority of money used to fund public education, pay police and firefighters, pave the roads and maintain the parks, kill mosquitos and clean up run-off that goes into the lagoon.
And if you pay your taxes early, you get a discount!
