There’s no denying it: Florida homeowners are fed up with property taxes.
Tax bills have gotten so high that more than 66% of Floridian voters passed a ballot measure aimed at increasing their property tax break. Amendment 5 would tie the state’s homestead exemption to the annual national inflation rate.
Currently, Florida homeowners can get a property tax break of up to $50,000 of their home’s assessed value. By tying the homestead exemption to the nation’s Consumer Price Index (CPI), if inflation goes up annually — so does your exemption.
The measure comes as Floridians have seen property taxes spike nearly 60% within five years. Pandemic boomtowns such as Jacksonville, Tampa, and Miami registered the largest increase, a report by real estate brokerage Redfin found.
The measure is expected to impact an average of 4.3 million households each year. Still, some analysts are concerned about its effect on the state’s funding.
Here’s what you need to know about Florida’s property tax break.
Florida homestead exemption
Planning to relocate anytime time soon to the Sunshine State? Well, you’ve probably heard of Florida’s homestead exemption.
- The tax break allows you to reduce the taxable value of your primary residence by $25,000 plus an additional exemption of $25,000 for properties valued over $50,000.
- Currently, the homestead exemption cannot increase more than 3% per year, or the consumer price index, whichever is lower.
For example, if the taxable value of your home is $400,000, you’ll get a $50,000 tax break on that total assessed value. Some realtors estimate it can save homeowners around $800 on their tax bill each year.
What changes with Amendment 5?
With Amendment 5, your homestead exemption will move in tandem with the Consumer Price Index or annual national inflation rate starting in January. If inflation climbs, say 2%, your tax break will increase by a similar amount. At the same time should the inflation rate weaken, your exemption won’t change.
Some of those against Amendment 5, characterize the tax break as “regressive.”
The Florida Policy Institute estimates that once the amendment was approved, households would see an average savings of just $20 over the first five years of its enactment. The measure would also exclude renters and small businesses.
Their biggest concern is the potential impact on the state’s local government funding, as property taxes represent a large portion of revenue. By their calculations, local governments would lose roughly $406 million within the first five years.
By the fifth year, the inflation adjustment would cost localities as much as $140 million annually. Some of the most affected local governments include:
- Miami-Dade
- Broward
- Palm Beach
Why are Florida property taxes so high?
Florida property taxes surged nearly 60% in five years and it’s not just climbing home prices to blame.
Florida homeowners have seen their property tax bills balloon close to 60% within five years in Tampa and Jacksonville alone. According to Redfin, the dramatic increase is due to the influx of residents during the pandemic homebuying boom, and partly a result of the increasing intensity of natural disasters.
However, property taxes in the Sunshine State had been climbing long before the pandemic came to shake real estate up. Florida is home to three of the five major U.S. metros where property tax bills have increased the most since before 2020.
In Jacksonville, the typical homeowner pays nearly 60% more in property taxes today than they would have before the pandemic, bringing the total tax bill up $228 to $2,735. This was followed by two Florida metros:
- Tampa’s bills jumped over 56%, equal to $250 or $2,797
- Miami’s property taxes grew 48%, rising by $387 to a total of $4,401
By comparison, property taxes nationwide increased by an average of 30% over the same period to a monthly median of $250.
What’s next for Florida’s property tax
Property taxes will still be a sore point for Floridians for the time being.
The influx of new buyers during the pandemic’s housing boom in the Sunshine State pushed home prices up substantially. While prices have fallen from their peak, assessed home values are still up - causing property taxes to remain elevated.
Since Florida is one of the few no-income tax states, local governments have to find funding for projects somewhere. Two other factors those interested in moving to Florida should keep in mind:
- Rising population levels have driven local governments to seek more funding for schools, roads, and public services. Raising taxes like your property tax is one way to do it.
- Natural disasters like hurricanes, tornadoes, and floods are another reason why property tax bills may seem higher. According to Redfin, Florida governments use some of the funds to invest in climate-resiliency projects.
While the homestead exemption may increase your tax break with time, there are other ways you can lower your property tax bill. For example, relocating to a county with lower property tax rates, limiting your home improvements, or seeking other government assistance programs.
Stay tuned to see if Floridians will see a slightly larger homestead exemption rate next year.
