On March 29, 2023, Governor Ron DeSantis signed Senate Bill (SB) 102, also known as the “Live Local Act.” The new law represents the largest investment for housing efforts in Florida history. The bill invests $711 million for housing projects and assistance through the Florida Housing and Finance Corporation (FHFC) to create or build upon housing programs.
The major sections of the bill are summarized below and are specifically related to property tax exemptions that provide incentives for developers constructing affordable housing as well as existing multifamily owners in Florida.
The “Missing Middle” (Section 8 of SB 102)
Affordable housing developers shall receive what is being commonly referred to as a “missing middle” ad valorem tax exemption for portions of a multifamily project up to:
- 75% of the assessed value if the project provides housing to natural persons or families whose annual household income is greater than 80% but no more than 120% of area median income (AMI), or
- 100% of the assessed value if the project provides housing to natural persons or families whose annual household income does not exceed 80% of AMI.
Qualifications:
- Project must be “newly constructed,” meaning that the improvements were substantially completed within five years before the earlier of 1) the date of an applicant’s first submission of a request of certification, or 2) an application for an ad-valorem exemption.
- Project must contain more than 70 units dedicated to persons or households whose household incomes do not exceed 120% of AMI.
- Units must not be subject to an agreement with Florida Housing and Finance Corporation (FHFC).
- Cannot be used with Section 9 of the SB 102 exemption as detailed below.
Affordable Housing Property Tax Exemption (Section 9 of SB 102)
This exemption allows counties and municipalities to adopt an ordinance to exempt qualifying portions of a property from ad valorem taxes up to:
- 75% of the assessed value of each residential unit used to provide affordable housing if less than 100% of the multifamily project’s units provide affordable housing, or
- 100% of the assessed value of each residential unit used to provide affordable housing if 100% of the multifamily project’s units provide affordable housing.
Qualifications:
- Used to house persons or families whose annual income is greater than 30% but no more than 60% of AMI.
- Must contain more than 50 residential units of which at least 20% will be used to provide affordable housing.
- Units must be rented for the lesser of 1) an amount that does not exceed the amounts specified by the most recent multifamily rental program income and rental limit chart posted by FHFC [derived from Housing and Urban Development (HUD)], or 2) 10% below the market rate of the required rental market study.
- The property must not have been cited for three code violations in the preceding 24 months and must not have outstanding code violations or related fines before final determination on a property’s qualification.
Building Materials Sales Tax Refund (Section 12 of SB 102)
The building materials sales tax refund allows an owner of an affordable housing development to receive a refund of sales tax paid on building materials used in construction of the development, providing the construction materials were purchased on or after July 1, 2023, and the following requirements are met:
- Newly constructed means improvements to the property that did not previously exist or construction of new improvements where the prior development was completely removed.
- This excludes renovations, rehabilitations, expansion, etc. from eligibility.
If you would like to learn more about how to qualify for these new opportunities, please contact the local tax experts listed below.
TECHNICAL INFORMATION CONTACTS:
Brad Wallace
Principal
Ryan
404.942.6346
brad.wallace@ryan.com
Marcus Capouano
Director
Ryan
321.251.2922
marcus.capouano@ryan.com
Randy Harmer
Manager
Ryan
321.306.2385
randy.harmer@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.
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