Florida voters have approved Amendment 3, a measure that significantly increases the homestead property tax exemption, potentially saving homeowners thousands of dollars. The constitutional amendment passed with approximately 62 percent of the vote, surpassing the 60 percent threshold required for passage.
Beginning January 1, 2027, the homestead property tax exemption will rise from $50,000 to $150,000. This exemption will further increase to $250,000 in 2028, and starting in 2029, it will be adjusted annually for inflation. These changes apply to property taxes funding local services but exclude school districts, where the existing $25,000 exemption will remain in place.
Homeowners who wish to benefit from the expanded exemption must establish Florida residency by December 31, 2026. Individuals moving to Florida after January 1, 2027, will generally need to wait until their fifth year of homestead exemption eligibility to receive the enhanced benefit.
Real estate professionals suggest the change could incentivize existing homeowners to upgrade their properties. Chris Wands, founder of The Wands Team at Douglas Elliman, noted that the prospect of higher property taxes often deters homeowners from moving to more expensive homes. "In Florida, one of the biggest financial hurdles for homeowners is stepping up into a new tax basis," Wands said, adding that the amendment could "unlock some people who have wanted to move but hesitated because of the tax reset."
The amendment also alters the rules for non-homestead properties, such as rental homes and commercial buildings. For these properties, the annual cap on increases in assessed value will be reduced from 10 percent to five percent, excluding school district taxes. Danny Castro, BDO Florida Tax Market Leader, stated this could offer commercial property owners and investors greater predictability regarding future tax bills.
However, the measure is projected to significantly impact local government finances. A state economic analysis estimates that local governments could lose nearly $5 billion in property tax revenue in the 2027-28 fiscal year, with projected losses climbing to almost $9 billion the following year and potentially reaching $12 billion annually by 2031-32. Critics warn that these shortfalls may force local governments to cut services or seek alternative revenue sources.
"One of the first things taxpayers will need to understand is that the larger homestead exemption does not apply uniformly to every component of the property tax bill," Castro cautioned. "The actual benefit will depend on the property, its assessed value, and the applicable local taxing authorities."
The amendment takes effect on January 1, 2027.