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Cornell uses mother-in-law’s Save Our Homes benefit to pay half the property taxes of his neighbors

BY LEN CABRERA

In August 2019, Alachua County Commissioners Ken Cornell and Robert “Hutch” Hutchinson accused then-Alachua County Property Appraiser Ed Crapo of under-assessing high-dollar properties in Alachua County. It turns out that while Cornell was complaining that some people aren’t paying enough in property taxes, Cornell himself was taking full advantage of his real estate and accounting knowledge to pay half the taxes of his neighbors. 

In 2016, Cornell sold his Melrose home and purchased a new home for $275,000 more than the sale price of his old home, yet his 2017 property tax on the new home was $1,100 less than the 2015 property tax on the old home and less than half the amount paid by neighbors with lower estimated market values.

According to Alachua County tax records, Cornell purchased his Melrose home in 2016 for $715,000. When he purchased the home, its assessed value was $386,090, with a tax bill of $8,183. (The tax bill is based on the taxable value, which reflected a $50,500 homestead exemption.)  The following year, the home’s assessed value dropped over 40% to $224,960, cutting the property tax to $4,562 (after the same $50,500 exemption). His 2020 tax bill was $4,844, still less than the final full year in his less-expensive previous home ($5,351 on an assessed value of $265,700). According to Zillow.com, his current home’s estimated market value is now $916,800, but the assessed value was just $239,427 in 2020. 

When asked about the reduction in assessed value between 2016 and 2017, the Alachua County Property Appraiser, Ayesha Solomon, gave the following statement: “The Alachua County Property Appraisers Office is statutorily required to maintain 3 values for each property within the county. These three values are market or just value, assessed value, and taxable value. General real estate market estimators found online do not factor in things such as exemptions, capping or deferred values, classifications, or cost of sale adjustments that the Property Appraisers Office is required to consider.” Solomon was elected in 2020 after Crapo retired.

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Specifically for Cornell’s home, the Appraiser’s Office said, “The new owners of the property applied for homestead and portability, reducing their assessed value by $208,840 and therefore reducing the taxes.”

In 2017, Cornell’s just (market) value was $433,800, and the assessed value was $224,960. The difference between those is $208,840, just as the Property Appraiser’s Office reported. The homestead exemption ($50,500) is deducted from the assessed value to get the taxable value ($174,400). 

Portability is the transfer of the Save our Homes (SOH) assessment limitation, the “accumulated difference between the assessed value and the just (market) value,” from one property to the next property owned by the same person if both are in the state of Florida. An example: A home with an assessed value of $200,000 with a Just (Market) Value of $350,000 has a $350,000 – $200,000 = $150,000 tax benefit. If this homeowner sells the home and buys a new home, the $150,000 tax benefit would be applied to the new home’s Just (Market) Value so the Assessed Value will reflect the $150,000 tax benefit.

The Appraiser’s statement implies that the $208,840 difference between Cornell’s 2017 just (market) value and his assessed value was transferred from the SOH benefit on his previous home. In that case, there would be a similar difference between the just (market) value and assessed value of his previous home, but tax records indicate that those values were the same, so Cornell did not have an SOH tax benefit to transfer.

In response to our request for comment, Cornell wrote, “We had a large transfer of Save Our Homes from my mother in law’s previous home that lowered the assessed value.”

Cornell’s home is in two names, and the second name belongs to his mother-in-law. Checking with the Duval County Tax Collector and Property Appraiser confirmed a very large SOH benefit transfer. Cornell’s mother-in-law’s home sold in 2016 for $390,000. That year, the just (market) value of her house was $371,739 and the assessed value was $162,901, for a difference of $208,838. The property tax on that home was $2,257 in 2016. 

An obvious advantage of Cornell’s real estate expertise is having in-depth knowledge about the real estate market and the tax benefits that can be exploited. Cornell’s mother-in-law picked a great year to sell her home: in 2016, the just (market) value soared 16.4%, and the assessed value only went up 0.7%. The SOH benefit in 2016 was $51,137 more than it was in 2015. 

Cornell and his mother-in-law both sold their homes in 2016 and jointly purchased the new Melrose home for $115,000 less than the sale prices of their previous homes; at the same time, they reduced their combined property taxes from $7,608 to $4,562.

Cornell’s 4,099 square-foot lakefront home has the highest estimated market value in the entire neighborhood. Much smaller houses, owned for much longer and with much lower market values, pay significantly more in property taxes. One home was bought in 2006 for $620,000. Its assessed value in 2016 was $363,300, only $22,000 less than Cornell’s. The next year, that property owner paid 61% more in taxes than Cornell ($7,359 vs. $4,562).

The closest neighboring house, in terms of current estimated market value, was built in 2016. It’s a much smaller house (2,546 square feet), but the year after it was built, when Cornell’s assessed value dropped 40%, this home was assessed at $455,840, with a tax bill of $10,738— more than twice Cornell’s tax bill. (The owner did not claim a homestead exemption.) The current Zillow.com estimated market value is over $200,000 lower than Cornell’s home, but the 2020 assessed value and taxes are double those of Cornell’s house.

None of this is illegal, but few people are aware that they can save that much money by transferring a parent’s SOH benefit to a newly-purchased, jointly-owned home when a parent decides to move in with their children. 

In 2020, the Alachua County Commission voted to set the property tax rate for the general fund at the rolled-back rate, which keeps property taxes nearly flat for existing property owners. But for 2021, the County Commission will vote on September 14 to impose a rate that is 3.61% above the rolled-back rate, increasing the general fund budget by about $8 million; thanks to the SOH benefit transfer, Cornell will pay a smaller share of that increase than his neighbors.

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