For years — decades, really — Miami-Dade homeowners have been ducking property taxes by illegally claiming homestead exemptions, usually with impunity.
There are people like Joseph and Sheron Barnes, who according to county records rented out a house at 1132 NE 84th Street and listed it as their permanent residence.
And there are others like the heirs of Willadean Allen, who records say left the lucrative homestead status on her home at 8605 SW 56th St. for 17 years after she died, chalking up tax savings year after year.
Still others double dipped, like Maria Eugenia Escagedo, also known as Maria Fleites, who records show claimed homestead on 13180 Old Cutler Rd. and on a second home, too.
But these days, gambling on getting caught is a fool’s game.
Homestead-exemption deceit has erupted into a red-hot issue in Miami-Dade and a crackdown is under way with all indications that it will only get tougher for tax cheats to elude detection.
The price of getting caught: Up to 10 years of unpaid back taxes, plus a 50 percent penalty and 15 percent annual interest. The biggest tab this year: $403,329.70 on the Barneses’ property.
Since January, six detectives from the Economic Crimes Bureau of the Miami-Dade Police Department have been working to bolster the muscle of 15 investigators at the Property Appraiser’s Office in nailing violators. That is up from two police detectives deployed in 2011 to tackle a backlog of some 3,500 complaints (now about 2,166) which typically come from tips from neighbors, estranged spouses and others.
This May, Property Appraiser Pedro J. Garcia unveiled a new contract for software and services to flag suspicious claims among the 440,000 homestead properties.
For July alone, the property appraiser, armed with smarter tools, filed $11 million in homestead liens. That compares with $8 million filed for all of 2011.
Fueling the intensified scrutiny: money, of course.
Starved for revenue, interest groups at the county, the school district and cities are clamoring for tougher enforcement of homestead- exemption rules in hope of bringing in revenue to help save public jobs and programs threatened by the budget ax.
At the same time, the new use of data-mining tools to cross-check property records against an array of data from deaths to marriages to voter registrations to auto tags to water bills holds the promise of weeding out suspect exemptions in bulk, generating more and better leads than the hotlines and anonymous tips that have spawned many cases in the past.
The property appraiser’s fledgling foray into high-tech sleuthing came after a retired police major who ran the Economic Crimes Bureau, Jim DiBernardo, began pushing last fall for the county to get proactive against what he asserts are widespread violations costing perhaps hundreds of millions of dollars in lost tax revenue.
In September 2011, the Dade Police Benevolent Association, facing major concessions, trumpeted the need to get tough on tax cheats. The Property Appraiser’s Office disputes the estimates as inflated and said it was exploring data technology before homestead fraud became a hot public issue.
Add to the mix a fiercely contested political race for the office of property appraiser.
Carlos Lopez-Cantera, the 38-year-old majority leader of the Florida House who is at his term limit, is vying to oust Garcia, 74, from the $169,000 a year post in the August 14 election. Lopez-Cantera has painted the incumbent as slow to act on homestead fraud and is pledging to root out violations with proactive tactics such as engaging the cooperation of Realtors and utility companies.
“He [Garcia] denied for a long time that the problem even existed,” said Lopez-Cantera, adding that recent stepped-up efforts by Garcia’s office come on the eve of the election. Lopez-Cantera questions whether the recent contract the property appraiser signed for high-tech data-mining capability is the best approach.
Garcia insists that he has been targeting homestead fraud since taking office as Miami-Dade’s first elected property appraiser in 2009, boosting county liens for undeserved homestead claims to $8 million in 2011 from $3.6 million in 2008.
“If my mother were alive and she were claiming homestead illegally, she’d be in trouble,” Garcia told The Miami Herald.
The difference in tax on a property with homestead and one without can be enormous. Homestead status excludes $50,000 from the assessed value (but only $25,000 for school taxes) used to calculate property taxes. But that exemption is peanuts compared to the savings many get from the Save Our Homes cap.
Under the Save Our Homes constitutional amendment, which took effect in 1995, the taxable value of homestead property can rise no more than 3 percent a year — no matter how much market value goes up.
Over time, the cap on assessments has spawned drastic tax differences on similar residences, with some people paying double or triple the taxes as a neighbor in a similar home, based on the value at the time homestead status was locked in.
Even with the historic collapse in home values, $13.4 billion in Miami-Dade residential value is excluded from taxation this year because of Save Our Homes. That is down from $66 billion in property value that was kept off the tax rolls by the cap in 2008 before the bubble burst.
With homestead status dating to 1996, the bayfront property on Northeast 84th Street owned by Joseph and Sheron Barnes had a taxable value of $489,554 in 2008 — less than a fifth of its market value of $2,682,813.
After investigating anonymous calls, the property appraiser’s office filed a lien on the property, seeking back taxes, penalties and interest totaling $403.329.70 — the largest lien so far this year.
The property appraiser claims the home was rented in 2005. That would nullify its homestead status, unless the owners had moved back in and reapplied, said deputy property appraiser Lazaro Solis.
Other reasons for the big tab: Property appraiser records say the home, which is in foreclosure, was abandoned. The Barneses couldn’t be reached for comment.
After a lien is filed, the county doesn’t sell tax certificates or seek foreclosure. But the tax bill must be paid before a property can be refinanced. When a property with a tax lien is sold, the county and other taxing authorities like the school district are the first in line to collect — ahead of any mortgage holder.
Some people pay the bill right away. That was the case with Escagedo, who owns the home at 13180 Old Cutler Road. She recently paid $156,676.85 for back taxes, penalties and interest for 2001 through 2010 after the property appraiser sent her a notice of back taxes due because she also had a homestead exemption for 13720 Farmer Rd.
Reached by telephone, Escagedo said she paid the tax bill promptly and didn’t want to air the details. “There was no lien filed,’’ she said.
Florida requires that a homestead be the “permanent residence to the exclusion of all others.” Her tax bill for loss of homestead ranked among the top 10 this year.
During the boom, the Old Cutler Road property was taxed on less than a third of the property’s market value: In 2007, for instance, its market value was $885,075, but it was assessed for taxes at $225,278 because its long-time homestead kept its taxable value from rising more than 3 percent a year.
Broward County Property Appraiser Lori Parrish, who has long advocated getting tough on homestead cheats, recently reeled in a similar whale for double homestead. In June, Michael and Susan Hooley were hit with a $325,459.16 in back assessments on their waterfront home at 1352 Seminole Dr. in Fort Lauderdale. The tax tab, covering 2007 through 2010, came after Ron Cacciatore, director of investigations for the property appraiser’s office, confirmed that Michael had purchased a second home in the Florida Keys and filed for homestead on it. Records show Michael was registered to vote in Monroe County. Still, married couples are only allowed a single homestead between them.
Another recent lien filed by the Miami-Dade property appraiser on a yellow, two-story house at 8605 SW 56th St. seeks $114,124.90 in back taxes, penalties and interest because the homestead wasn’t removed after the owner, Willadean Allen, died — in 1994.
The property is vacant and listed for sale. Allen’s children, listed in court papers as the heirs, couldn’t be reached for comment. Brian J. Felcoski, the estate’s attorney, declined to comment.
The plunge in property values has eliminated the advantage of the Save Our Homes cap for many homestead properties, leaving the relatively modest break of the $50,000 exemption ($25,000 for school taxes.)
During the boom days of 2007, for instance, Shahriar Bahmani’s house at 360 NE 103rd St. had an assessed value of $334,637, which was $150,298 below its market value of $484,935, because of a Save Our Homes cap.
But by 2009, its market value plunged far below the level it was capped at under Save Our Homes, meaning the only advantage of homestead status was the basic $50,000 in exemptions, which cut the tax bill by a relatively small sum of $1,065.60 in 2011.
This month, the property appraiser notified Bahmani it was eliminating the homestead status for 2005 through 2011 after its investigation showed the house had been rented since 2004. The Property Appraiser said it plans to file a lien for $30,058.99 if the back taxes, penalty and interest aren’t paid by July 31st. Bahmani couldn’t be reached for comment.
With the issue of uncollected taxes at center stage, the property appraiser in March sent letters to condo and homeowner associations, listing member properties receiving homestead and asking them to name which properties were rented.
Some advocates of get-tough tactics on homestead are pushing for legislation that would force the condominium and homeowner groups to comply with demands to identify rental units.
Meanwhile, county commissioners eager to bolster tax revenue without the politically toxic prospect of raising tax rates, have been casting about for ways to catch cheats. In May, the board approved an ordinance that allows the property appraiser to ask the commission chairman to issue a subpoena. The property appraiser already had the ability to seek a subpoena through the county Inspector General’s Office or State Attorney’s Office.
While illegal homestead exemptions are commonly labeled “fraud,” authorities rarely pursue criminal charges, and none were filed against property owners mentioned in this article.
The Miami-Dade State Attorney’s Office said it is evaluating whether to bring criminal charges in two other cases investigated by Miami-Dade detectives, including one presented last week.
But except in particularly egregious circumstances with clear evidence of criminal intent, the focus is on collecting the money.
Says Howard Rosen, chief of organized crime for the Miami-Dade State Attorney’s Office: “It’s so easy to put a lien on the property.”