Residential
Florida Voters Face Property Tax Overhaul With a Hidden Cost for Buyers
By Real Estate Wire Staff, . Real Estate Wire.
Florida voters will decide in three weeks whether to phase out homestead property taxes on owner-occupied homes, a measure that Realtor.com News reports could reshape the state's fiscal structure and its housing market simultaneously.
If Question 3 passes, the homestead exemption rises from $50,000 today to $150,000 in 2027, then to $250,000 in 2028. Outgoing Gov. Ron DeSantis, who championed the initiative, estimates that would eliminate property taxes for 60% of Florida homeowners. The average homeowner in the state pays roughly $2,338 a year in property taxes, according to a 2024 estimate from MidFlorida Credit Union, with significantly higher bills in Miami-Dade and Palm Beach counties.
The two candidates to replace DeSantis are on opposite sides. Republican Byron Donalds said during his party nomination acceptance speech in August, "Whether Amendment 3 passes or fails, we are going to reform property taxes in our state with a goal of eliminating homestead property taxes once and for all." He says the money police and fire would lose has to be made up some other way, but he has not said publicly how. Democrat David Jolly has turned harder against it. Speaking to WFLA in September, Jolly said everyone wants the numbers to work but they probably do not, adding, "There’s a reason firefighters, police officers have come out against it." His alternative is a tax break aimed at people buying their first home.
The fiscal math is the core dispute. Local municipalities and schools collected $59.17 billion in property taxes last year, up from $32 billion in 2019, with the state projecting collections of $83 billion by 2032 at current rates. By the Florida Chamber of Commerce's count, $22.83 billion of last year's total, 38.6%, went to school boards, $20.68 billion, or 35%, went to counties, and the rest went to cities and special districts. Homestead residential property tax accounts for roughly a third of all local government property tax revenue.
The Florida League of Cities found 85 municipalities could not maintain public safety at current levels even if they eliminated every other property-tax-funded service. The list includes Key West, Fort Myers and Pensacola.
Mark Wilson, who runs the Florida Chamber of Commerce, expects reaching 60% on Question 3 to be "pretty hard," and pointed out that the Tax and Budget Reform Commission may take the question up again in 2028.
For buyers, the calculus is more complicated than a lower tax bill. Realtor.com senior economist Joel Berner estimates that eliminating property taxes would push Florida home values up 7% to 9% immediately, adding $200 billion to $250 billion to the state's aggregate housing stock value and making entry-level purchases harder to afford.
Cutting services would cost the state something too over time, according to Neil Schiller, a managing partner at Government Law Group, because it makes Florida a less appealing place to live. Schiller put it this way: "Florida is desirable not just for the weather; local and county governments have created an environment that is encouraging for people to come and live in Florida." "By reducing those services, maybe that isn't the case in the future and that is something that needs to be considered," Schiller added. Schiller also flagged the tourism risk if sales taxes rise to compensate: "Add a 10%, 15%, or 20% sales tax, and you will see a decrease in tourism. It will create a significant further divide between the wealthy and the not wealthy."
Buyers have reason to be careful as well, says Crystal Olenbush of Austin Real Estate. Olenbush said the exemptions look like an easy win for buyers, yet somebody still has to cover the revenue that goes away. "If small counties trim services or shift more of the load onto commercial and nonhomestead owners," she said, "the neighborhood someone is buying into changes, even though their own bill went down." Her advice to clients is to model the exemption against a specific property over ten years, not just the headline number.
The measure also includes a five-year residency requirement before new Florida arrivals can claim the benefit, and caps annual assessed-value increases for nonschool levies at 5%.
What the vote will not resolve, regardless of outcome, is how local governments replace the revenue if the exemption passes. That question, and whether Tallahassee steps in with a substitute funding mechanism, is what investors in Florida commercial and multifamily property should be watching most closely: a shift of the tax burden toward nonhomestead properties would change the operating economics of those assets materially.
Source: https://www.realtor.com/news/real-estate-news/florida-homestead-tax-exemption-impact-homeowners/