ORLANDO, Fla. - Local governments depend heavily on property taxes. They’re used to fund schools, police and fire protection, but 9 Investigates discovered plenty of people are cheating the system and they are not being prosecuted.
Channel 9's Vanessa Welch discovered that hundreds of property owners across central Florida have claimed homestead exemptions when they do not deserve the tax break.
She found the illegal homestead exemptions are costing local counties millions of dollars in lost revenue.
Welch explored the case of one attorney who owns a 3,600-square-foot home in a gated Metro West golf community. She learned the Orange County Property Appraiser’s Office is accusing him of unlawfully benefitting from the property tax break for years.
Orange County Property Appraiser records show Julio Gil De Lamadrid was double-dipping, claiming a homestead exemption on his Orange County property and his home in Puerto Rico as well.
“Of course he should know better,” one of his neighbors said. “We are all doing our part to maintain this community. If he is not doing his part, shame on him.”
Investigators with the Orange County Property Appraiser's office determined Gil de Lamadrid has been getting an exemption on his home in Puerto Rico since 1993.
His neighbor told Welch, “Those who know how to play the game, play the game.”
Records show he owes more than $69,000 in taxes, penalties and interest here in Orange. They also show that a lien was placed on his home here.
Meanwhile, documents from Puerto Rico show Gil de Lamadrid received a property tax exemption for a home there, but during a phone interview he told 9 Investigates he doesn’t currently receive the exemption in Puerto Rico and is asking Orange County to reconsider his case.
He also said he is waiting on documents from Puerto Rico to confirm his innocence.
The Orange County Property Appraisers Office has closed his case, but a spokeswoman for the officer said in a statement that, "The taxpayer has recently informed us that he is providing further documents that may or may not change the status of this case.”
However, 9 Investigates uncovered other court documents from Gil de Lamadrid's bankruptcy filing that appear to confirm the suspicions of the property appraiser’s office. They show that he listed a $21,000 exemption on his home in Puerto Rico.
In Florida, the homestead exemption saves the average homeowner $700 a year in property taxes. It can mean even more savings for homeowners who also claim the Save Our Homes tax cap.
The rules allowing the homestead exemption are straightforward: You must live in the home as your primary residence to qualify, and you can’t receive a residency based exemption anywhere else.
But many property owners still try claim dual exemptions.
Welch discovered more than $4 million in unpaid taxes across central Florida, owed by people caught wrongfully claiming the exemption. And that’s just for 2013 and 2014.
“That's a big problem,” Volusia County Property Appraiser Morgan Gilreath said.
And while claiming dual homesteads is a crime, Gilreath said he doesn’t know of one person who has been prosecuted.
The problem, he said, is that proving a homeowner intended to cheat the system is difficult. That’s why most state attorneys don’t want to take on these cases, Gilreath said.
Still, his investigators aggressively pursue tax cheats. He has two full-time investigators, one of whom is retired law enforcement.
Those investigators have returned $44 million worth of value to the tax rolls in Volusia since 2006 by discrediting improper homestead exemptions.
“If you are getting one you don’t deserve, someone else is having to pay higher taxes because of that,” Gilreath said.
And if you are caught, the penalties are stiff. A lien is placed on your home until you pay the back taxes. In addition, you’ll have to pay a 50 percent penalty and 15 percent interest each year.
Still, Gilreath said there is little incentive to pay the fees emanating from the bogus homestead exemption.
If you don't pay your regular property taxes, your home can be sold out from under you by the tax collector in three years.
Gilreath is encouraging state lawmakers to apply those same rules to homeowners who don’t pay back taxes due to undeserved homestead exemptions. He hopes they will file a bill in Tallahassee next year.
There are several existing rules governing homestead exemptions. For instance, you can rent a homesteaded property for up to 30 days, but not for two consecutive years. Also, if two people are married, but are totally separate or estranged, they may qualify for two exemptions as “separate family units.” These cases are rare.
In most cases investigators get tips from neighbors and anonymous hotlines to discredit improper homesteads.
Property appraisers also send out nonforwarding renewal notices to everyone who receives a homestead. If it comes back to the property appraiser’s office, that’s a red flag. It’s something that would cause investigators to determine if owners are renting the home or no longer living there and claiming an illegal homestead exemption.