On Tuesday, November 3, Florida voters approved an amendment to the state constitution that will substantially increase Florida’s homestead exemption. Roughly 62% voted in favor of Amendment 3, surpassing the 60% threshold necessary to amend Florida’s constitution. With one notable exception discussed below, homeowners will pay property taxes on a smaller portion of the value of their primary residence. The new exemption thresholds will begin taking effect on January 1, 2027.
How the Homestead Exemption Works
Florida’s homestead exemption is relatively simple. It reduces the taxable value of a permanent home occupied by the homeowner or a dependent, with only one exemption allowed per individual or family unit. Claiming the exemption also qualifies the home for the Save Our Homes assessment cap, a provision in the Florida Constitution that limits annual increases in the assessed value of the claimed homestead for ad valorem (according to value) tax purposes. Currently, Florida residents claiming the homestead exemption have an annual assessment increase cap of 3%. Nonresidents, such as New Yorkers who own Florida vacation homes, generally have a 10% cap. Amendment 3 will increase the homestead exemption and lower the non-homestead assessment cap.
Prior to Amendment 3’s approval, the first $50,000 of a qualifying permanent home’s assessed value was exempt from non-school property taxes. This meant that a house assessed at $500,000 would be taxed as if it were worth $450,000. The exemption will increase substantially in two stages, in 2027 and 2028. Beginning in January 2027, the first $150,000 of a qualifying permanent home’s assessed value will be exempt from non-school property taxes. In 2028, the exemption will increase to the first $250,000 of assessed value. This means that, in 2028, the same home assessed at $500,000 will be taxed as if it were worth $250,000 for non-school taxes. That $250,000 exemption will be adjusted for inflation beginning in 2029.
Is this a big deal? In terms of real dollars, this means that a taxpayer with a $1 million home in Palm Beach, for example, would save approximately an extra $900 in 2027 and $1770 in 2028. Not chump change, and still worth a blog post, but it won’t change the lives of most of our clients!
What Else Has Changed?
There are several important things to keep in mind when considering the homestead exemption, both generally and in light of these changes.
First, vacation homes owned by nonresidents or second homes owned by Florida residents do not qualify for the homestead exemption. Amendment 3 also addressed new arrivals to the Sunshine State: new residents will initially receive the smaller $50,000 exemption, with the larger exemption beginning in their fifth year of claiming it. This applies to qualifying owners who have not established a permanent residence as of December 31, 2026. So, if a taxpayer who doesn’t live in Florida was looking to lock in the new benefit for 2027-2028, they’d have to move before the end of this year. But again, as noted above, that benefit is fairly modest, even stretched over 5 years.
Second, Amendment 3 lowered the cap on certain annual increases in assessed value. Beginning in January 2027, annual increases in the assessed value of non-homestead properties, such as rentals and commercial buildings, will be capped at 5% for non-school taxes, half that of the current 10% annual limit. This is actually the bigger deal in terms of the dollar impact for taxpayers, and it impacts taxpayers who are NOT primary residents of Florida. The lower cap narrows the gap between the assessment caps for homestead and non-homestead properties, since the gap between the cap applicable to residents (3%) and nonresidents (5%) is now a lot smaller.
One thing that has not changed is the application deadline for the homestead exemption. Residents who qualify must still apply by March 1 of the tax year for which they are claiming it.
Amendment 3 also limits how counties and municipalities can spend property tax revenue. Governor DeSantis, who initially pushed for major cuts to property taxes before distancing himself from the amendment’s final version, has said he will convene a special legislative session in the next two months to implement the changes before his term ends in mid-January 2027.
