Will Eliminating Florida Property Taxes Backfire on Homeowners?

There is something almost theatrical about a political proposal that promises to save you money while quietly rearranging who actually pays. Governor DeSantis announced on May 27 that he is calling the Legislature back for a special session during the week of June 1 to consider a constitutional amendment aimed at eliminating property taxes on homesteaded properties in Florida. The proposal, titled “Save Our Homes from Excessive Property Taxes,” would immediately raise the homestead exemption to $250,000 and establish a path toward full elimination of property taxes on primary residences.

For those of us who have practiced real estate law in South Florida for over 30 years, this is not the first time a bold tax proposal has arrived dressed as a gift. The question is never whether the wrapping looks appealing. The question is what is inside the box.

The Existing Homeowner Wins. That Part Is Real.

Let us be clear about one thing: for the homeowner already sitting in their home, the Florida property tax elimination would deliver genuine, tangible savings. A homeowner with a $400,000 primary residence could save thousands of dollars a year in non-school property taxes. That is real money. Nobody disputes it.

But real estate does not operate in a vacuum. It never has, and it never will. Every dollar that disappears from one side of the ledger reappears somewhere else, and the redistribution is rarely as equitable as the original promise suggests.

The Capitalization Trap: New Buyers Pay More

Economists have studied property tax capitalization for decades. The Federal Reserve Bank of Minneapolis published research in 2024 confirming what practitioners have long observed: property taxes shift the total cost of housing into the future, and that capitalization effect makes homes more affordable for younger and first-time buyers. NYU Stern economist Abdoulaye Ndiaye put it plainly: property taxes effectively act as a forced mortgage, giving families lower prices today in exchange for ongoing annual costs.

Flip that equation. When you eliminate ongoing property taxes, the market reprices the asset upward. The buyer who was factoring in $8,000 or $12,000 a year in future tax liability no longer needs to discount their offer. Research consistently shows that at least 71 percent of expected property tax liabilities are capitalized into housing prices. In South Florida, where the median home price already strains working families, that repricing could add tens of thousands of dollars to the purchase price of an average home.

The existing homeowner gains equity. The new buyer faces a higher barrier to entry. If the goal of the Florida property tax elimination plan is affordability, this is a curious way to achieve it.

Renters Get Squeezed, Not Saved

Here is where the irony sharpens. The proposal applies to homesteaded properties, which are primary residences. Rental properties, by definition, are not homesteaded. Landlords continue paying property taxes on their investment properties. But as the Florida Association of Counties has pointed out, if the tax base shifts, non-homestead properties, including rental housing, could see their effective rates increase. Even if rates hold steady, landlords whose competing homeowners just received a massive cost reduction will reprice their units to capture whatever the market will bear.

Renters, who make up roughly 34 percent of Florida households, receive zero direct benefit from this proposal. They may, however, absorb its indirect costs through higher rents, higher sales taxes, or both. The Florida Policy Institute has estimated that replacing the lost revenue through sales tax alone could require raising the rate from 6 percent to as high as 12 percent, the highest in the nation, a burden that falls disproportionately on lower-income households.

One cannot help but marvel at the arithmetic: a plan designed to help homeowners could end up making it harder to become one, while making it more expensive to rent.

$18.5 Billion Has to Come from Somewhere

Cities, counties, and school districts do not vanish when their revenue does. Property taxes generate approximately $55 to $60 billion annually across Florida and fund roughly 50 to 60 percent of public school budgets, 18 percent of county revenues, and 17 percent of municipal revenues. The Florida Policy Institute’s analysis found that eliminating property taxes on all homesteaded properties alone would cost local governments approximately $18.5 billion: $7.8 billion for counties, $3 billion for municipalities, and $7.7 billion for school districts.

The state’s own Revenue Estimating Conference projected that under HJR 203, the House’s phased approach, local non-school property tax revenues would drop by $4.4 billion in the first year alone, growing to $13.3 billion annually as the phase-out progresses.

In Miami-Dade County, eliminating all property taxes would mean a $3.27 billion revenue loss, roughly 19 percent of the total budget. Even the narrower homestead-only elimination would cost Miami-Dade approximately $899 million. In Broward County, where our firm has represented buyers, sellers, and distressed homeowners for over three decades, the numbers are proportionally devastating.

The Mayor of Tampa noted that 100 percent of the city’s property tax revenue funds police and fire services. Senate Appropriations Chair Ed Hooper captured the rural dilemma when he observed that Florida has 67 entirely different counties, and a property tax policy that works for one could crush 31 poorer ones. There is a reason HJR 203 passed the House 80-30 in February but died without a hearing in the Senate Appropriations Committee: the math does not add up without a credible replacement revenue plan.

The Long Game: When Services Decline, So Do Values

Here is the part of the Florida property tax elimination debate that requires the longest lens. For those of us who lived through the 2008 crisis in South Florida, we have seen what happens when the infrastructure of a community deteriorates. We represented homeowners in neighborhoods where code enforcement disappeared, where response times doubled, where parks closed and streets buckled. Property values did not merely decline; they collapsed, because the community itself had become less desirable.

The same mechanism operates here, only slower. Hiring freezes. Deferred maintenance. Reduced library hours. Longer wait times for permits. Fewer after-school programs. These are the thousand small cuts that, over ten to fifteen years, transform a thriving municipality into a declining one. The homeowner who thought they had won discovers their home is worth less because the community around it quietly hollowed out. The renter who was priced out never accumulates the savings to buy in. The new buyer who overpaid at the top of the repriced market finds themselves underwater.

The cruel paradox of eliminating property taxes to protect homeowners is that, without adequate replacement revenue, it undermines the very services that make those homes worth owning.

What does this all mean?

Governor DeSantis has called the special session for the week of June 1. The proposal still requires a three-fifths vote in both legislative chambers to reach the November ballot, and then 60 percent voter approval to amend the constitution. None of that is guaranteed, particularly given the Senate’s resistance during the regular session. But the momentum is real, and the debate is consequential.

For Florida homeowners, the appeal of eliminating property taxes is understandable and legitimate. But this is a decision that deserves scrutiny beyond the headline:

• Existing homeowners benefit immediately. Thousands of dollars a year in savings on non-school property taxes. This part of the promise is real.
• New buyers face higher purchase prices. Research shows at least 71 percent of property tax liabilities are capitalized into home values. Eliminate the tax, and the market reprices upward, raising the barrier to homeownership.
• Renters receive no direct relief and may pay more. Rental properties remain on the tax rolls. If revenue shortfalls trigger higher sales taxes or fee increases, renters absorb those costs disproportionately.
• Local governments face an $18.5 billion revenue gap. Counties lose $7.8 billion, municipalities $3 billion, and school districts $7.7 billion, with no legislatively approved replacement plan in place.
• The Revenue Estimating Conference projects a $4.4 billion first-year hit to local non-school revenues under HJR 203, growing to $13.3 billion annually as the phase-out progresses.
• Public safety is not immune. Tampa’s mayor has stated that 100 percent of the city’s property tax revenue funds police and fire. Constitutional protections for law enforcement budgets shift cuts to parks, libraries, infrastructure, and permitting.
• Long-term property values depend on community quality. Decades of real estate practice in South Florida confirm that when services deteriorate, so do the neighborhoods they support, and so do the home values within them.

At Oppenheim Law, we have represented South Florida homeowners, buyers, and property owners through every cycle this market has produced over the last three decades. If you are evaluating how this proposal might affect your property, your transaction, or your community, we encourage you to look beneath the surface.