Voters in Florida approved a ballot measure to lower property taxes for homeowners, by far the most noteworthy victory so far for the growing nationwide revolt against property taxes.
Amendment 3 in the Sunshine State was on track to be approved on Tuesday with 62% support and more than 95% of the votes in just before 10 p.m. To become law, the measure had to receive 60% of the vote in Florida.
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Amendment 3 in Florida will significantly increase the state’s homestead exemption, from $50,000 to $150,000 in 2027 and then to $250,000 in 2028.
Voters in Florida, Oklahoma, North Carolina, Wyoming, and other states are voting on ballot measures in the midterm elections that would lower property tax burdens for homeowners.
Proponents argue that such initiatives would provide much-needed relief for taxpayers who have seen the value of their homes explode in recent years.
“We are in the midst of a new property tax revolt in states across the country,” Jared Walczak, vice president of state projects at the Tax Foundation, told the Washington Examiner.
Homeowners have seen their homes’ assessed value increase since the pandemic, leading to much higher tax bills.
Critics, though, point out that property tax reductions would crimp revenues, and communities would need to fill that gap by cutting spending or by increasing other taxes or rates.
And, while property tax breaks provide relief to homeowners, they raise home prices, pushing ownership further out of reach for would-be homebuyers, who have already seen the monthly payment for a typical home roughly double since the pandemic, thanks to higher mortgage rates coupled with the steeper prices.
That is because a house subject to lower property taxes is more affordable at a higher price point. So, for example, a family that could afford only a $500,000 house with $3,500 in annual property taxes might be able to afford a $525,000 house if the taxes are halved. Accordingly, prices are bid up to that higher price point when property taxes are cut.
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That’s a problem for people who are looking to break into the market and need to save up for a down payment.
In a recent example of research on this topic, a study by economists at New York University and Baruch College, released in August, found that lower property taxes tend to discourage older homeowners from selling and limit access to housing for younger families. But higher property taxes can cause older homeowners to sell, thereby decreasing home prices for young prospective buyers.
Florida’s was the most dramatic of the ballot initiatives related to property taxes this election cycle, especially because the Sunshine State already has the “Save Our Homes” amendment to the Florida Constitution, which makes it so that the assessed value of someone’s homestead property can increase by no more than 3% above the previous year’s assessed value.