Florida preparers - Information request

[FEDUKE404]

Client moved to Florida in summer of 2016.

The county tax bill (Walton County) shows an ad valorem assessment based upon the value of the property. Since the bill was paid in November, a 4% discount was applied. There was also an adjustment, at time of closing, for the seller's portion of the relevant 2016 taxes.

The same bill also shows a separate "non ad valorem assessment" for XYZ Community Development District (CDD). The CDD fee was not discounted for early payment, even though it was paid as part of the 2016 "tax bill."

Obviously a homeowner cannot deduct the CDD as a real property tax. So, what happens to this cost??? Does it perhaps get added to the cost basis of the residence? If so, how long can these CDD charges continue? In theory until the bonds or whatever are paid off. . .assuming there is no default (seems to be a common problem!) first?

Related issue: A used vehicle from another state has now been registered in FL. What amount(s) qualify as "personal property taxes" and where is that information found? Does FL perhaps play the old trick of adding a "sales tax" charge to the car when it is first registered in that state?

Any useful information from someone familiar with FL tax matters will be greatly appreciated. So far, most of this is Greek to me.

Well, at least there is no state income tax.

FE

[FEDUKE404]

No Florida preparers to help ?

This is an update to my prior message, which remains unanswered. I really thought I might hear something. . .

The 2016 fee structure has been located. Most of the "property taxes" are for the CDD costs, especially since the 2016 ad valorem portion of the bill was based upon interim construction on a new house.

Obviously the CDD fees are not a valid income tax deduction, even though they show up on and are included in the "property tax bill."

Question #1: Do the CDD fees, to be in existence for several future years although diminishing, have ANY effect upon the cost basis of the house? As best I understand things, the CDD costs are not so much an "assessment" as they are community debt service.

QUESTION #2: The Form 1098 from the mortgage company showed as "property taxes" the entire amount, including the CDD fees, paid to the county during 2016. While the amount is correct for the amount on the property tax BILL, the amount is far greater than the allowable ad valorem portion of the same bill. Is getting a copy of the actual county tax bill what most FL tax professionals do?

Thanks again. Hope someone will answer this time. . .

FE

[Burke]

My interpretation of these things is, it is a "tax" when it is based on valuation (ad valorem), or a percentage of property value. It is a "fee" when it is a flat amount, and therefore not deductible, even if the authorities call it a tax. Since the CDD is not an assessment for improvements that affect the property to which the fee is billed, I would not add it to the property's basis either.

VA localities bill an additional flat fee on personal property tax bills, but it is not deductible. They used to issue a decal for that fee, that you had to put on your car, but decided to save money and not go to the trouble. They just still charge the fee because they did not want to give up the money.

[FEDUKE404]

CDD fees versus ad valorem property tax

My interpretation of these things is, it is a "tax" when it is based on valuation (ad valorem), or a percentage of property value. It is a "fee" when it is a flat amount, and therefore not deductible, even if the authorities call it a tax. Since the CDD is not an assessment for improvements that affect the property to which the fee is billed, I would not add it to the property's basis either.

VA localities bill an additional flat fee on personal property tax bills, but it is not deductible. They used to issue a decal for that fee, that you had to put on your car, but decided to save money and not go to the trouble. They just still charge the fee because they did not want to give up the money.

Agree. The actual property tax bill very plainly states the CDD is a non ad valorem assessment. The county will discount an "early" payment of the ad valorem tax but will not discount the CDD assessment.

As stated earlier, the Form 1098 from the mortgage company shows the entire amount as "property taxes paid in 2016." That total is the discounted ad valorem tax plus the CDD assessment. A tax person who does not ask for the actual tax bill. . .could be making a major error.

Hopefully I won't invoke the wrath of the TTB gods, but here is the most recent document related to the FL CDD assessments. (See page 9 for charges that are apparently allocated by size of the lot??) LINK -->>> https://hammockbaycdddotcom.files.wo...et-8-22-16.pdf

I appreciate your assessment that the CDD fees are not a cost basis item. Not really sure what they are, except some creative financing for the good residents of Florida.

Regarding the VA localities fee, most NC cities for years had a separate vehicle "tax" that was nothing more than a city registration fee. (You now pay county/city ad valorem tax, plus the vehicle fee, plus the DMV ALL at the time of annual renewal.) In the dark ages the cities would actually issue a small license tag for the front of the car. Then they went to a windshield decal. Now the car remains unimbellished but your "property tax" bill has an extra $30 or so added for the vehicle fee.

FE

[Burke]

Regarding the VA localities fee, most NC cities for years had a separate vehicle "tax" that was nothing more than a city registration fee. (You now pay county/city ad valorem tax, plus the vehicle fee, plus the DMV ALL at the time of annual renewal.) In the dark ages the cities would actually issue a small license tag for the front of the car. Then they went to a windshield decal. Now the car remains unimbellished but your "property tax" bill has an extra $30 or so added for the vehicle fee.FE

Wow. I too remember that small tag which was added to the license plate (and we have them on both ends, unlike NC) now that you mention it. Showing our age.