Florida voters have approved Amendment 3, a significant property tax reform measure that will expand the state's homestead exemption, potentially saving homeowners thousands of dollars annually. The amendment, which passed with approximately 62% of the vote, requires a 60% threshold to amend the state constitution.
Beginning in 2027, eligible Florida homeowners will see the portion of their home's assessed value exempt from most local property taxes increase from $50,000 to $150,000. This exemption is set to rise to $250,000 in 2028 and will adjust with inflation starting in 2029. For instance, a homeowner with a property assessed at $400,000 could see their taxable value reduced to $150,000 in 2028, compared to $350,000 under the current exemption.
Realtor.com analysis suggested the median Florida homeowner could save around $1,800 per year by 2028, though actual savings will vary based on local tax rates and property values.
However, a five-year residency requirement will apply to those not established as Florida residents by December 31, 2026. New residents will initially receive only the existing homestead exemption, with the expanded benefits phased in during their fifth year of homestead eligibility.
Florida has long been a popular destination for residents from states like New York, partly due to its lack of state income tax and favorable climate. In the luxury real estate market, the tax changes are viewed positively. Miltiadis Kastanis, executive director of sales at Compass, noted that clients have been discussing the potential tax changes and see it as an incentive to relocate. He suggested that the five-year waiting period might even prompt some to accelerate their relocation plans to begin the eligibility clock sooner.
Wealthy buyers are often drawn to tax trends, and Kastanis indicated that New York, California, Illinois, and Washington D.C. remain primary sources of affluent buyers considering Florida. While inquiries have increased, they have not yet fully translated into transactions.
The reform also impacts second homes and investment properties by reducing the annual cap on assessed value increases from 10% to 5%. This means a property assessed at $500,000 could see its taxable assessment rise by a maximum of $25,000 annually, down from $50,000 under previous rules. This cap applies to assessed values and not tax rates, and assessments may be reset when a property is sold.
The changes are occurring as South Florida continues to attract financial institutions, with Wells Fargo relocating its wealth-management headquarters to West Palm Beach, joining a growing number of firms establishing a presence in the region.