Florida House Bill 451 and Senate Bill 1450 look to change the basis for property appraisal of timeshares, potentially saving owners (and developers) millions of dollars.
Via his Substack "Seeking Rents", reporter Jason Garcia examines efforts by the Florida House and Senate to change the method for valuing timeshare properties, which in turn could reduce owners' property tax obligations.
Current methods include resale values when calculating the tax basis for a property. However, if there is not enough resale activity, values are largely reliant on the higher prices charged by developers for selling "new" ownership:
If a property appraiser can’t find enough legitimate resales to use as comps, the law requires them to instead to base their appraisals on prices charged by timeshare developers — the companies like Disney, Marriott and Wyndham, which collectively sell billions of dollars’ worth of timeshares every year.
That’s what property appraisers usually end up doing.
But timeshare owners complain that this leads to unfairly inflated property values — and unfairly inflated property tax bills — because developers charge far higher prices than any individual owner ever could.
Identical bills making their way through the House and Senate propose using resale transfers as part of the tax basis regardless of whether the pricing is tainted by low volumes or illegitimate activity.
Estimates show that Florida could lose more than $200 million in tax revenue per year if the new valuation methods are adopted. These savings would be realized by both timeshare owners and developers like Disney Vacation Club who hold a substantial amount of unsold inventory. Garcia correctly points out that Disney's savings may not be as substantial as other timeshare developers due to the robust resale market for DVC points. However, any favorable change in the valuation method--combined with declining DVC resale prices witnessed in recent months--stand to reduce tax obligations for both owners and the developer.
Check out jasongarcia.substack.com for the full story, as well as extensive coverage of Florida politics.