Live Local Florida

Live Local Act: Unlocking Tax Relief for Multi-Family Property Owners

Florida's Live Local Act, effective July 2023, is a comprehensive approach to tackling the state's housing affordability crisis. It offers a range of incentives, including the Multifamily Middle Market Certification Newly Constructed Multifamily Project Ad Valorem Tax Exemption, also known as the "missing middle" tax exemption.

Understanding the Live Local Act

The Act focuses on two key areas:

• Increased Funding: It allocates $811 million for various affordable housing programs, supporting development and preservation efforts.
• Streamlined Incentives: It introduces new tax breaks and land development regulations to make building affordable housing more attractive for developers.

The "Missing Middle" Tax Exemption: this specific tax break targets the "missing middle" income earners who struggle to find affordable housing options that aren't subsidized housing projects. Here's a breakdown of the exemption:

• Eligibility: New or recently constructed multifamily developments (completed within the last 5 years) with at least 71 units
• Income Targeting: These designated units must cater to tenants whose incomes fall below 120% of the Area Median Income (AMI).
• Tax Benefit: Depending on the income range served:
  • Units for tenants at or below 80% of AMI qualify for a 100% exemption on property taxes.
  • Units for tenants between 80% and 120% of AMI qualify for a 75% exemption on property taxes.

Benefits of the Exemption

This tax break significantly reduces property taxes for developers, making affordable housing developments financially more attractive. This can lead to:

• Increased Supply of Affordable Housing: More developers are incentivized to build affordable units.
• Greater Housing Options: Offers renters a wider range of choices beyond traditional subsidized housing.

Application Process

To receive and maintain the Missing Middle tax exemption, property owners must complete an annual certification process with both the Florida Housing Finance Corporation (FHFC) and Florida Department of Revenue alongside the local property appraiser.

The process generally includes:

1. Annual Middle Market Certification (FHFC)
   • Owners must submit the Middle Market Multifamily (MMM) Certification through the FHFC online portal
   • This certification confirms unit count, income targeting, and rent compliance
   • Deadline: January 15 of each year
   • Upon approval, FHFC issues the MMM Certificate, which is required for the property tax exemption application
2. Completion of DOR Form DR-504AFH
   • Owners complete and sign DOR Form DR-504AFH which formally elects to participate in the affordable housing tax exemption program for the applicable tax year
   • The FHFC-issued MMM Certificate must be attached
3. Submission to the Property Appraiser
   • Submit the completed DR-504AFH, MMM Certificate, and supporting documentation to the county Property Appraiser
   • Deadline: March 1 of each tax year (unless extended by statute)
4. Property Appraiser Review & Approval
   • The Property Appraiser reviews compliance, may request clarifications, and determines the final exempt value

Ongoing Compliance Requirements

• Annual FHFC Certification (January 15)
  • Continued eligibility requires timely submission and approval of the MMM Certification each year.
• Annual Property Appraiser Application (March 1)
  • The exemption is not automatic and must be renewed annually.
• Income & Rent Monitoring
  • Tenant incomes must comply with AMI thresholds
  • Rents must remain within limits by unit type
• Record Retention & Audit Readiness
  • Maintain income verification and lease documentation
  • Properties may be subject to FHFC or Property Appraiser review