This November, Florida voters passed an amendment to its constitution reducing property taxes for many residents. This amendment titled “Increased Homestead Exemption; Lower Cap on Increases in Non-Homestead Property Assessments” (the “Amendment”) will substantially increase Florida’s homestead tax exemption which will result in a reduced property tax burden for many homeowners.
Florida’s Homestead Ad Valorem Tax Regime – CURRENT LAW
Florida Homestead. Florida’s homestead tax exemption shields a portion of qualifying homeowner’s residence from certain ad valorem taxes. Generally, the current law provides that the first $25,000 (and up to $50,000) of a home’s assessed value is exempt from all property taxes (including school district taxes) and limits the increase in assessed value (the taxable property base) to the lesser of 3% or the annual Consumer Price Index. The second $25,000 of a home’s assessed value is exempt only from non-school district taxes.
Florida Non-Homestead. If the Florida property is not qualifying Florida homestead, the assessed value limitation is capped at 10% per year.
Florida’S Homestead Ad Valorem Tax Regime – Under the Amendment
Florida Homestead. The Amendment significantly expands Florida’s homestead tax
benefits. The homestead exemption for homeowners who establish and maintain a
permanent residence in Florida by December 31, 2026, will increase from $25,000
to $150,000 in 2027 and increase again to $250,000 in 2028. Thereafter, the exemption amount is adjusted annually for inflation. This increased exemption applies only to non-school district taxes (e.g., county, municipal, special districts). For school district taxes, the exemption remains unchanged at $25,000 of the home’s assessed value. Reviewing your TRIM Notice can help you determine the taxing authority and the millage rate for each.
Example: if you purchased a property on February 1, 2025, and qualified for homestead by December 31, 2026. Beginning in 2027, up to $150,000 of your home’s assessed value will be exempt from all taxes except school district taxes.
Non-residents moving to Florida will see a “phase in” of these exemptions: starting January 1, 2027, non-residents applying for homestead will see only a smaller $50,000 exemption amount and not reach the full exemption benefit until maintaining the homestead status for five (5) years. This $50,000 exemption amount will be adjusted beginning January 1, 2028, for inflation.
Example: if you purchased a property on February 1, 2025, and remained a non-resident on or after January 1, 2027, your homestead exemption will “phase in.” If you qualify and apply for homestead on February 1, 2027, the new exemption will begin in 2028. Up to $50,000 of your home’s assessed value will be exempt from all non-school district taxes, with the exemption amount adjusted for inflation each year afterward. Then, at the beginning of the fifth year that you maintain your homestead status, you will receive the full exemption for all non-school district taxes, which amount will be as determined and adjusted for inflation beginning January 1, 2029 (i.e., at a minimum, up to $250,000). The same example applies if you purchase property on or after January 1, 2027, and qualify for homestead in 2027 or a later year.
If you are not a Florida resident on January 1, 2027, there is another point to keep in mind: beginning on January 1, 3030, a county or municipality may vote to reduce the five-year homestead status requirement if the reduction is warranted for a critical local need. This means each county and municipality could have somewhat different property tax laws, and it may be important for homeowners to understand what applies to them.
Florida Non-Homestead. The Amendment also reduces the annual maximum increase in property’s assessed value from the current cap of 10% down to 5%. This is very meaningful for non-resident property owners and Florida resident property owners with non-homestead real property.
Required Use of Ad Valorem Tax under the Amendment
Additionally, the Amendment limits the use of all ad valorem taxes to: providing for public safety; providing funding for education and public schools; financing or refinancing infrastructure and natural resource projects; issuance of local bonds for uses consistent with the foregoing and making debt service payments for existing obligations; meeting obligations for retirement benefits of local government employees; or funding the operations and administration of county officers and commissioners and municipalities and the expenditures approved by such governing bodies.
Reassessment on Application for Homestead – A Trap for Current Homeowners
The decision to file for qualified homestead is not always straightforward. Current homeowners (residents and non-residents alike) should carefully consider whether the application to file for homestead will reduce their property taxes. Florida law requires the property appraiser to reassess a property’s taxable value when an owner applies for Florida homestead. In some circumstances, this reassessment will actually result in increased taxes, even when accounting for the increased homestead exemption that the Amendment establishes. Accordingly, homeowners should consult with their advisor to determine whether to apply for Florida homestead.
Effective Date of the Amendment
Because 60% of the residents of Florida approved the Amendment this November, the Amendment will take effect on January 1, 2027.
