Florida's Battle Against Property Tax Could Upend Its Housing Market

Newsweek

26-05-2025

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Governor Ron DeSantis' proposal to eliminate property taxes in Florida could have huge consequences for the state's housing market, experts told Newsweek, potentially boosting homeowners' wealth while slashing aspiring homebuyers' chances to get on the property ladder.
Why It Matters
Florida is among several GOP-led states that are currently trying to drastically reduce, reform, or even abolish property taxes to offer relief to homeowners struggling with rising housing costs.
While the proposal has not yet fully been planned out, DeSantis said he is supportive of eliminating property taxes in the Sunshine State, an action that would require in the end a constitutional amendment approved by 60 percent of voters.
What To Know
While several states are actively considering abolishing their property taxes, every state currently has one, "so there are no test cases that show the true cost of elimination," Manish Bhatt, senior policy analyst at the Tax Foundation, told Newsweek.
"However, where voters were given a choice, they opted to keep the tax, perhaps realizing that the dangers of elimination were not properly considered," the analyst said, referring to previous attempts in other states that have failed to eliminate property taxes.
In 2024, a proposal to eliminate all property and income taxes in Nebraska, including the inheritance tax, failed to make the ballot.
Photo-illustration by Newsweek/Getty
However, Florida lawmakers seem determined to offer homeowners in the state some kind of property tax relief as soon as possible. Earlier this year, DeSantis described property taxes as "the most oppressive and ineffective form of taxation," saying that paying them is "basically" the same as "paying rent to the government to live on your own property."
Bhatt is skeptical of this concept. "Proponents of property tax elimination often cite fairness as a primary motivation. It is commonplace to hear the refrain 'paying a property tax is akin to renting your property from the government,'" he said.
"While this may generate strong sentiments, it is not an accurate assessment of the property tax or its function. The tax is not rent; it is payment for the local services received," he said. "When structured well, the property tax is a good tax, and for that reason it merits reform not wholesale elimination."
A Risky Move for Less Wealthy Florida Homeowners
The Sunshine State does not have an official plan yet of how it would go about eliminating taxes or how local governments would replace lost revenues—but experts have been thinking about how this could actually work.
The Florida Policy Institute (FPI) told Newsweek it had not yet analyzed the potential impact of eliminating property taxes on the state's housing market. However, it recently published a report that warned policymakers that, should they pursue eliminating property taxes without "a cohesive plan to raise taxes in a progressive manner," households with low to moderate incomes would "end up paying more in taxes, as a percentage of their earnings, compared to wealthy residents if sales taxes increase to make up the lost revenue."
On top of that, homeowners who currently claim a property tax deduction in their federal income tax returns would lose the deduction, which means that their personal income taxes could potentially increase.
Bhatt thinks that eliminating the property tax could represent "a significant transfer of wealth to existing homeowners whose houses would be worth more now that they do not bear tax liability, whereas future buyers would have to pay prices reflecting that fact."
Moreover, because the property tax better aligns with local benefits, it produces outcomes that are likely to be more favorable to the housing market than a replacement tax would be, Bhatt said.
"For these reasons, Florida lawmakers would do well to reconsider the property tax elimination effort and instead seek strong levy limits which constrain the growth in local property tax revenue, adjusting for inflation and population growth," Bhatt said.
"Pairing this with narrowly tailored circuit breakers helps protect low- and fixed-income residents from being taxed out of their homes."
Protecting the 'American Dream'
Professor Suzanne Hollander, an attorney teaching real estate law and property rights in Miami at Florida International University, is more optimistic about the impact of eliminating property taxes.
"In my opinion, efforts to protect and preserve the American Dream of Homeownership are the foundation for this trend [of growing interest toward eliminating property taxes]," she told Newsweek.
"Today, U.S. homeownership is threatened by increased property valuation leading to increased property taxes, elevated rates for insurance, elevated mortgage interest rate and increased condominium fees as a result of the Surfside Champlain Towers Tragedy of June 2021," she said. "To protect American homeowners, governments must dedicate effort to deliberately design strategies to reduce the burdens on homeowners."
The Champlain Towers South condominium collapsed overnight on June 24, 2021, killing 98 people.
Hollander believes that eliminating property tax will increase housing values in Florida, "because eliminating property tax will be a magnet for investment and economic growth of Florida," she said. "Increased housing prices benefit current owners who, if they decide to sell, will be able to sell for a higher purchase price," she added.
On the other hand, she says that increased housing prices in the state may provide "a challenge for potential buyers who may have to save up to buy, move in with friends and family and or rent interest rates come down."
Highly Dependent, Weaker Local Governments
In its recent report, FPI warned that local governments in Florida would lose fiscal autonomy and become dependent on the state for funding, whether that is for schools or other public services like police and firefighting. The institute found that Florida would need to raise roughly $50 billion to maintain public services currently funded by property tax revenues if these taxes are abolished in the state.
Bhatt agrees that eliminating the property tax could leave local governments dramatically underfunded.
"A well-structured property tax is more efficient than other taxes and creates less economic distortion. The property tax is also 'self-reinforcing,' meaning as local services improve, property valuations increase. The opposite is also true when local services fall into disrepair and obsolescence," he explained.
"Unlike the income tax or sales tax, the property tax is not a primary concern when making relocation decisions. Texas, for example, has relatively high property taxes but continues to recruit and retain residents because, in part, the state does not tax individual income," he said.
"Florida is in a similar position, but if lawmakers are forced to implement new taxes to make up for lost property tax revenue, the state's regional and national competitiveness may be lost."
What Happens Next
In February, lawmakers in Tallahassee introduced Senate Bill 852, which calls for the Office of Economic and Demographic Research to produce a report on how the state could responsibly and feasibly eliminate property taxes.
"I think SB 852 is an important step in the right direction—just because property taxes have 'always' been the source of funding for municipalities public services should not prevent a study into other methods that could be more efficient, relieve the burden on the property owner and promote further growth of business and investment in Florida that would help all Floridians," Hollander said.
The idea of eliminating property taxes could be put aside should Florida lawmakers fail to come up with a concrete proposal before the end of DeSantis' term in 2026. But there is still time for things to move forward.
Bhatt believes that given the risks posed to local government, Florida's attempt to eliminate property taxes should be taken seriously.
"Unless the state raises other taxes or backfills local coffers, eliminating the property tax could leave Floridians without the quality or quantity of local services that they depend on each day," he warned.
Hollander is positive that any legislation aiming at eliminating property taxes in the state could pass with the required 60 percent vote. Based on 2023 data from the Federal Reserve Bank Statistics, 67.3 percent of Florida residents are property owners.
"Additionally," she said, "nobody likes to pay taxes."