Homestead Fair Assessment Act (HFAA) Q&A

Questions and Answers – Homestead Fair Assessment Act (HFAA)
Senate Bill: 610
State Senator Sam Zamarripa

On the November 2nd ballot you will have the opportunity to vote on a resolution to limit the increase of Fulton Property Taxes to no more than 3%. This referendum is a result of legislation that I passed in the 2004 Georgia Legislative Session. I have tried to summarize some aspect of this referendum to give you a better idea of how it works and how it could impact your property. This referendum does not change the portion of your property tax bill from the City of Atlanta or The Atlanta School System. You may read more about the Homestead Fair Assessment Act on my web site

Q. What is the Homestead Fair Assessment Act?

I have studied property tax solutions for several years and SB 610 is the product of two years of work with other elected officials, community leaders and the office of legislative counsel. The bill is designed to provide stability and predictability to home owners in Fulton County. It accomplishes this by limiting the increase of a property tax bill to 3% per year or the consumer price index; which ever is lower. It limits the increase by raising the homestead exemption to cover the cost/value of any reassessment. The mechanics are outlined below.

If adopted, the Homestead Fair Assessment Act (HFAA) would allow a referendum on whether a homeowner’s homestead exemption should be increased each year to offset any increase in the assessed value of a homestead property. If enacted, in the 2005 taxable year, HFAA would provide an increase in one’s homestead exemption by an amount equal to the increase in the assessed value of such property between the 2003 taxable year and the 2005 taxable year (other than increases due to capital improvements). Going forward, HFAA would limit the increase in assessed value to the value of any capital improvements made to the property.

Q. What types of real property does HFAA apply to?

HFAA applies only to residential real property with respect to which a homestead exemption has been claimed and allowed.

Q. What happens when someone sells their property?

When a home owner sells their property, the county may revalue the property tax to the full value of the existing valuation without regard for the 3% cap or the consumer price index. In other words, new home owners will pay a higher rate or level than a previous home owner. However, even though the rate and level will be increased, the new home owner will benefit in the next tax year because their tax rate cannot increase more than 3% or the CPI. Stability and predictability is the idea.

Q. What happens if a homeowner makes improvements to his or her property?

Under HFAA, if a homeowner makes capital improvements to his or her homestead property, the value of such property for tax purposes may be increased by the full value of such capital improvements.

Q. Why is HFAA needed?

HFAA is needed to encourage stability in neighborhoods and protect homeowners from unanticipated and unaffordable increases in property taxes. In many transitional and growing neighborhoods, long time homeowners have seen their tax bills rise dramatically because of growth in property values that they cannot control. Despite rollbacks in millage rates, these homeowners still pay more in taxes because their values have increased in an amount greater than the average assessment. Unlike business or investment property owners, homeowners generally derive no income from their homes. Furthermore, the only way to actually realize the appreciation in the value of a home is to sell it.

Q. Aren’t local governments already required to have hearings if they do not roll back the mileage rate?

Yes, but many local governments still use these assessment increases as back door ways to increase property taxes. Some governments call these increases “natural revenue growth”. While HFAA will not prevent local governments from raising taxes, HFAA will force the local governments to affirmatively vote in favor of raising the millage rate in order to raise the taxes paid by homeowners.

Q. Do other Georgia jurisdiction have laws similar to HFAA?

Yes, many jurisdictions in Georgia have adopted provisions similar to HFAA, including Chatham and Cobb Counties.

Q. Will HFAA restrict local jurisdictions’ ability to raise revenue? Will this bill cause school sytems and governments to lose millions of dollars?

No, a local taxing jurisdiction has the ability to set its millage rate at an amount necessary to raise the revenue it needs. Our research shows that digests continue to increase, revenue increases, and the ability of government to raise revenue is not impacted. Our research shows that millage increases to offset the homestead exemptions would be miniscule. See our data and fact sheet for more.

Q. Who will benefit from HFAA?

Every homeowner, particularly those in regentrifying or high growth areas.

Q. How does HFAA affect right of survivorship?

The bill would allow the ownership of homestead property to be changed into a joint tenancy with a right of survivorship until the 2006 taxable year. Thus, to the extent the ownership is currently in a different form, a homeowner should evaluate whether he or she should transfer the home into a joint tenancy to allow his or her domestic partner to enjoy the benefit of the protections contained in HFAA.

Q. Who will be negatively impacted by HFAA?

Because the provisions of HFAA are not applicable to businesses and investment property, if there is stability in the ownership of homestead, businesses and investment property owners will, over time, pay a higher proportionate share of the property tax. In addition, when a newcomer purchases a home for the first time, he or she will only be allowed the standard homestead exemption. However, the newcomer will be able to evaluate the taxes on the home at the time of purchase and rest assured that he or she will be protected by HFAA from subsequent unanticipated increases in the value of his or her home.

Q. Why doesn’t HFAA apply to all real property?

Unlike businesses and investment property, homestead properties generally produce no income. Homestead properties are also unique in that unlike a stock, a bond or an investment property, homestead property is needed to provide basic shelter and cannot be sold unless another home is purchased or rented.
2005 Neighborhood News