Appraiser’s plan targets homestead cheaters

Appraiser’s plan targets homestead cheaters

By Mike Wright, Citrus County Chronicle

Property Appraiser Les Cook has a plan in mind to catch homestead-exemption cheaters countywide. “We’re sensitive to the fact there are people who will be ignorant of the law,” Cook said.

Fair is fair, as some Citrus County homestead cheaters will soon learn.

Property Appraiser Les Cook is in the process of hiring a Charlotte, North Carolina, company to audit all 46,000 properties with a homestead exemption to see which ones are undeserving.

First, though, Cook must get buy-in from the county’s taxing authorities, such as the school board, cities and mosquito control district. The county commission has already given its OK.

The company, Tax Management Associates Inc., will receive a 30 percent finder’s fee on the back taxes and penalties paid by homeowners it finds who are receiving a homestead exemption but shouldn’t.

Because of the potential windfall of a million dollars or more in uncollected taxes, Cook says he will only initiate the program if all authorities sign on.

“You can’t benefit unless you participate,” he said.

The company, TMA for short, has already performed the service in four Florida counties — Brevard, Duval, Pinellas and Sarasota — and done similar projects in five other states.

Cook said he chose the company based on results in other counties and that the TMA did not want access to confidential information, such as homeowner Social Security numbers.

Instead, using only publicly available information, TMA, through a partnership with LexisNexis, is able to crosscheck homeowners with other states to find out if they have exemptions elsewhere or otherwise do not qualify for a homestead exemption.

The rate of fraud is estimated to be about 1 percent to 2 percent. In Sarasota County, it was less than 1 percent.

“I don’t think we have a severe fraud problem,” Cook said. “I’d like for them to come back and say there’s no fraud.”

Florida’s homestead exemption has a deep history.

The state first set a $5,000 exemption for residents on their homes in 1934 during the Great Depression. Voters increased it to $25,000 in 1980 and again to $50,000 in 2008.

Amendment 1 on this year’s ballot adds another $25,000 exemption for homes with taxable values of $100,000 or greater. About 37 percent of the county’s current homesteads would qualify for the higher exemption, Cook said.

(The second and, if voters approve, third homestead exemptions do not include schools. Homeowners receive just the $25,000 exemption on their school taxes.)

The rules for receiving an exemption are pretty simple: The house needs to be your primary residence. Some examples where an exemption would not be allowed include:

  • The homeowner receives an exemption on a house he owns in another state, or in Florida.
  • The homeowner rents out the house for more than 30 days a year (not necessarily consecutive), or up to 30 days a year for more than two straight years.
  • The owner has died, and the heirs are now living in the house but do not own it.

Citrus County has about 46,000 houses with a homestead exemption, and processes about 3,600 new applications each year, Cook said.

Once someone gets a homestead exemption, it’s up to that person’s sense of right and wrong to alert the county if they are no longer eligible.

Cook said he realizes some people may be violating the homestead law unknowingly, but he thinks most people will know.

“You can’t have a residency-based benefit in another state,” he said. “You sign and swear this is your primary residency and you establish documents in that effect. We’re sensitive to the fact there are people who will be ignorant of the law.”

But the county also gives homeowners plenty of opportunity to come clean.

Cards go out in January or February to homestead property owners reminding them of the homestead rules. Truth in Millage, or TRIM, notices are mailed out in July, notifying residents again of their potential taxes based on the taxable value — minus exemptions — of their home. And tax bills are sent out at the end of the year.

“A lot of folks know they’re getting a benefit in other states,” he said. “I see this as a tax shift.”

Cheating or simple error, the price for getting caught is steep. By state law, the county not only collects back taxes, but also a 50 percent penalty and 15 percent interest.

While there is no payment plan, the county may place a lien on a home for every year of taxes owed. So, if someone has had five years of exemption he shouldn’t have, the county may place five liens on the house — back taxes, penalty and interest for each year.

Liens stay with the property until the taxes are paid by the owner or the property is sold and the taxes are paid during the transaction.

Still, it could get expensive. Based on current tax rates, the $50,000 homestead exemption is worth about $600 in county taxes, almost $1,000 in Inverness taxes and $800 in Crystal River, Cook said.

Add the 50 percent penalty and 15 percent interest, and one year of county back taxes may cost a homeowner $920.

And, he said, the state makes no provision for amnesty. Whether someone comes forward or is discovered by investigation, the homeowner is still responsible for back taxes and penalties.

The company, Tax Management Associates, receives 30 percent of the back-owed amount, not 30 percent of the tax bill moving forward, Cook said.

Cook said he is in no hurry to get the program started. He wants to make sure taxing authorities and the public know what he is doing and why.

“If there’s something going on out there,” he said, “it’s a matter of fairness.”