Amendment 5 would lower taxes on homeowners, but others could pay more

A housing development in Kissimmee. A proposed state constitutional amendment would increase Florida's homestead exemption for property taxes. (Photo by Joe Raedle/Getty Images)

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Florida voters will get to decide in the November election whether to shield more of the value of their homes from property taxes under a proposed amendment to the Florida Constitution, but the measure might mean higher taxes for renters, landlords, and other commercial property owners.

The Annual Adjustments to the Value of Certain Homestead Exemptions measure will appear on the ballot as Amendment 5. The Legislature voted to place it there through HJR 7017 , which cleared the House and Senate during their regular session on party-line votes.

The ballot summary reads a little confusingly:

“Proposing an amendment to the State Constitution to require an annual adjustment for inflation to the value of current or future homestead exemptions that apply solely to levies other than school district levies and for which every person who has legal or equitable title to real estate and maintains thereon the permanent residence of the owner, or another person legally or naturally dependent upon the owner is eligible. This amendment takes effect January 1, 2025.”

To resolution sponsor Rep. James Buchanan, a Republican from Sarasota County, the desired effect is simple.

“This HJR is going to encourage home ownership, drive down the cost of home ownership, and ensure over time, as the cost of living goes up, that is reflected in their homestead exemption taxes,” he said.

The measure needs to win support from 60% of the voters to amend the Constitution.

Tax breaks

Florida provides an exemption from property taxes for the first $25,000 of the assessed value of a homestead, meaning a building where the taxpayer lives. There’s a second exemption of $25,000 of assessed value over $50,000, except for school taxes — in other words, on values between $50,000 and $75,000. The money fuels counties, municipalities, district school boards, and special districts.

State law requires reassessment of property values every year. Under the measure, assessments would be indexed to Consumer Price Index. That would apply only if the values increase — but not if they fall. Additionally, the change would not apply to school taxes. But the size of the exemption would grow next year to represent the $25,000 base exemption plus the rise in CPI, and similarly in future years  — money lost to local government services.

State economists predict the measure would reduce local government tax collections by $22.8 million during the 2025-2026 fiscal year, growing to $111.8 million during the 2028-2029 fiscal year, assuming existing tax rates.

A separate state law, the Save Our Homes Act, caps homestead tax increases at 3% per year or the CPI, whichever is less, representing an additional squeeze on local governments.

During a Jan. 23 hearing before the House State Affairs Committee, skeptics worried the measure would make it harder for local governments to support first responders — police, firefighters, and other emergency services.

“They have one pot of money to pay their bills, and what your bill is doing is diminishing their ability to collect dollars,” observed Democratic state Rep. Robin Bartleman of Broward County.

“I don’t necessarily think this is, you know, the state’s or the local government’s money to begin with. This is the people’s money. And we’re simply over time indexing their existing homestead exemption,” Buchanan replied.

Burden shift

Bartleman suggested the proposal would cause serious problems if the housing market crashes, as it did in the financial crisis of 2008.

Buchanan replied that inflation has undermined the value of the homestead exemption, justifying indexing the tax break.

Bob McKee, deputy director for public policy for the Florida Association of Counties, warned committee members the change would punish non-homestead property owners.

When local governments set tax rates each year, “it falls equally on all taxpayers,” McKee said. “What this does today is it shifts the burden. It shifts the burden from homesteaders to other participants in the property tax system — to businesses, to renters, to second-home owners.”

Homesteaders today end up paying taxes on about 40% of their assessed value, McKee said, while others pay on 80% of their property values.

The Florida League of Cities is also on record opposing the change.

Bartleman confirmed that cities in her district oppose indexing.

“This will have a negative impact on each and every one of them. I’m also concerned about the housing crisis that exists in Broward County, knowing that the burden will be passed on to the businesses in my county as well as the rental properties that will negatively impact the people who are renting, because those rates would have to go up,” she said.

“I see this as less of a tax cut and more of a tax shift where folks that are not property owners would end up having to make up the difference,” said Orange County Democratic state Rep. Anna Eskamani.

“I’m a renter, so I can relate to that,” Eskamani added.

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