Raising A House To Lower Insurance Premium Might Raise Taxes

Oct. 21--When Key West voters passed a referendum last November allowing homeowners in the city to raise their properties four feet above Federal Emergency Management Agency flood levels, the move was aimed at reducing flood insurance premiums.

But raising one's house could result in an increase in property taxes.

Key West resident Michael Bullock wanted to raise his home in the 3000 block of Flagler Avenue using the height exemption but was told by the Monroe County Tax Collector's Office that doing so would trigger the need to re-apply for his homestead exemption as if he had just purchased the home.

Florida's homestead exemption lowers property taxes by exempting up to $50,000 in assessed value. Rented and business space is excluded.

"It makes no sense," Bullock said. "The house would be reassessed at its current market value [and] offset any potential savings."

Bullock said he pays about $6,000 a year in flood insurance premiums and $4,000 annually in property taxes. He said elevating his home would result lower in paying about $200 in flood insurance but a $15,000 rise in property taxes.

Scott Fraser, the city's FEMA coordinator, is working to get language in the state law governing that changed.

"We're now working on a legislative cure," Fraser said. "We're in the process of researching and drafting a statutory change to alleviate this unfavorable consequence."

A home built three feet below base flood elevation costs about $6,700 annually in flood insurance. But for a home elevated to meet base election, that would drop to about $1,300 a year, according to city background information. The referendum allows any structure to go a maximum of four feet above base election, which would equate to an annual flood insurance rate of less than $450.

"People do want to raise their homes; the insurance is not going down," Key West insurance agent Caren Morell said. "It's going to be tough, especially in the city of Key West."

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