Florida homeowners are in crisis—but one Washington, D.C., lawmaker wants to offer tax relief as a way to ease the burden.
Rep. Vern Buchanan, a Republican from the Sunshine State, wants to bring back a bill that would give a tax deduction on mortgage insurance premiums.
The Middle Class Mortgage Insurance Premium Act would restore and permanently extend mortgage insurance tax deductions and expand the deduction to more taxpayers.
The original bill expired in 2021, when mortgage insurance was required (and still is) for homebuyers who cannot afford a 20% down payment. At the time, insurance premiums were tax deductible from 2007 to 2021. More than 361,000 Florida homebuyers needed mortgage insurance in 2020, according to a study by the Urban Institute.
In addition, the update to this bill increases the income limit from $100,000 to $200,000 per family.
“With housing prices skyrocketing in Florida and across the country, it’s our responsibility to provide tax relief for middle-class families seeking to own a home,” said Buchanan in a press release. “My bipartisan legislation will help make the American Dream of home ownership real for millions of Americans.”
Slow sales
The Florida housing market has experienced a cooldown as more homes linger on the market. In the Realtor.com® Monthly Housing Market Trends report for March, Jacksonville, Miami, and other Florida metro areas are “reflecting a cooling in the the Florida market.” Year over year there’s been a -15.1% drop in pending home sales in Jacksonville and -13.7% drop in Miami.
Housing experts say Florida’s high home insurance costs, led by an increase in natural disaster risks in the Sunshine State, are a likely factor in the slowdown.
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“In the past year or so, home shopping for properties in Florida by shoppers outside the Sunshine State has dwindled,” says Realtor.com Senior Economist Joel Berner. “Florida is getting less attention from home shoppers in other states than it was in previous years, and home affordability in the state seems to be the main culprit.”
The median list price in Miami is $512,000. In Jacksonville, the median list price is lower at $399,000.
Condo concerns
Owners of condominiums in the state are also faced with rising assessment fees.
Legislation, in the wake of the Surfside condo collapse that killed 98 people in June 2021, requires condo associations with properties that are three stories or higher—and more than 30 years old—to have “milestone inspections” and have enough reserves in their budgets to carry out major repairs and maintenance.
This forces condo owners to make monthly contributions toward their association’s reserve funds to support the long-term maintenance.
Condo owners are now burdened with increasing fees (reserve funds and HOAs) and skyrocketing home insurance premiums. It’s left many owners scared of losing their homes, while others have sold their properties—at times, at a loss for what they originally paid.
Meanwhile, Florida builders are being more cautious breaking ground on new projects, but Florida condo developers who have already committed to new projects are hoping a bill aimed at cutting condominium taxes gains traction on Capitol Hill. Rep. Buchanan is also the co-author of the Fair Accounting for Condominiums Act. It aims to exempt high-rise condominiums under construction from the current law, which only applies to houses.
The exemption would counter tax issues that come up when condominium developers receive customer deposits while a building is under construction. Keep in mind, property owners do not receive the purchase price balance until closing, but the condo developers must still pay the IRS income taxes on the property even though no cash flow is coming in yet.
“As millions of Floridians know, condos provide a great opportunity for low and middle-income families to enter the housing market,” said Rep. Buchanan in the press release. “We should be making it easier, not harder, for condo developers to build multi-unit condos, which will increase the housing supply for those most impacted by the nationwide housing crisis.”
Buchanan introduced this bill back during the 2023-2024 session and has reintroduced it in the current session to include the accounting update for new condominium construction.
