Florida Amendment 5 Homestead Exemption – Tax Relief or Burden?

On or before November 5, 2024 Floridians will cast votes for Presidential candidates but also for six amendments to the state constitution.

1. 1. Partisan Election of Members of District School Boards - read more
   2. Right to Fish and Hunt - read more
   3. Adult Personal Use of Marijuana - read more
   4. Amendment To Limit Government Interference with Abortion - read more
   5. Annual Adjustments to the Value of Certain Homestead Exemptions - this blog
   6. Repeal of Public Campaign Financing Requirement - read more

Ballot Amendment 5 Summary

Florida Amendment 5 offers voters the chance to decide if homestead tax exemptions should be annually adjusted for inflation. A supermajority of voters (60%) is required for approval.

“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.”

Intention

 

 

Amendment 5 has been proposed as a means for lowering real estate taxes (paragraph 3) for people who own and live in a permanent Florida residence. It is also seen as a way of offsetting surging housing costs (page 3 graph) due to rapid rise in the state population.

 

 

Mechanism

From the Florida Dept. of Revenue:

“When someone owns property and makes it his or her permanent residence or the permanent residence of his or her dependent, the property owner may be eligible to receive a homestead exemption up to $50,000. The first $25,000 applies to all property taxes, including school district taxes. The additional exemption up to $25,000 applies to the assessed value between $50,000 and $75,000 and only to non-school taxes. (see section 196.031, Florida Statutes)”

Amendment 5 would annually adjust the second $25,000 exemption to increase by the rate of inflation. The rate of inflation used will be the “Consumer Price Index for All Urban Consumers”. This rate is a broad pricing index which includes food and energy.

From the James Madison Institute:

"Constitutional Merit: This measure is not a reform that can be addressed by the State Legislature and thus requires a constitutional ballot initiative in order to be implemented."

Yes?

For fixed and low income homeowners, who are grappling with inflationary pressures, Amendment 5 offers substantive real estate tax relief. The amendment sponsor (Rep. James Buchanan) says:

“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.”

No?

Renters and businesses may perceive Amendment 5 as both “burden shifting” and a threat to local services. The Florida League of Cities maintains:

“While the assessed value of homesteaded properties can only increase at most 3% each year, the value of businesses and apartment complexes can increase as much as 10% per year. As homeowners contribute less to a local government’s tax base, landlords would most likely need to increase their rents to offset their increased property taxes.”

Summary

The Florida legislature is attempting to balance growth and costs. It is up to “We the People” to determine if the tax structure, as proposed, in Amendment 5 provides for sustainable growth at fair cost.

The Convention of States movement has steadfastly emphasized civic responsibility.

Prudent application of tax rates and discounting is at the economic heart of citizen/government relations.

It is imperative that we carefully examine both sides of Amendment 5.