Q&A – The Implications of Repealing Property Taxes in Florida Part 1
Each day I feature a listener question sent by one of these methods.
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Today’s Entry: Brian, Thank you for keeping us up to date each weekday.
I know it is early in the process for possibly eliminating property taxes. Is the effort towards only eliminating property taxes on residential properties with a replacement of more sales tax paid by the people occupying those properties?
Are commercial and industrial properties also being considered for property tax elimination? Many of the people working in these properties live somewhere else. I am having difficulty wrapping my head around how that would offset.
There are also municipalities with very little commercial development, such as the Town of Highland Beach. They have only one commercial property…a hotel/restaurant.
I could not find the amount and percentage of property taxes generated by residential versus commercial properties at the Palm Beach County Tax Collector’s website.
As a senior citizen and a longtime owner of the same Homesteaded property…with a very low property tax, I am concerned with having to pay way more (perhaps an equal share).
I agree with many of your points, especially communities that jack their millage up to the maximum.
I hope the study of this subject will include all impacts, both positive and negative. The short timeline to get it done is another concern.
Again, thank you for all you do.
Bottom Line: You’ve raised a good point and posed an excellent question as the state of Florida considers whether to explore ending property taxes as Governor DeSantis has called on legislators to do. The implications are many as people consider their own property tax situations and also the impact of residential vs. commercial property taxes. So let’s dive in.
The first step in the process, as you mentioned, is for the legislature to authorize a study. The bill that’s been introduced is entitled: Study on the Elimination of Property Taxes, has been filed in the Senate. The bill is super short so here’s the full text of the bill that explains exactly what’s being called for under this proposal:
(1) The Office of Economic and Demographic Research shall conduct a study to establish a framework to eliminate property taxes under chapters 192 through 196, Florida 14 Statutes, and to replace property tax revenues through budget reductions, sales-based consumption taxes, and locally determined consumption taxes authorized by the Legislature. (2) The study must include, at a minimum, all of the following: (a) An analysis of the potential impact of eliminating property taxes on public services, including education, infrastructure, and emergency services. (b) An assessment of potential housing market fluctuations, including changes in homeownership rates and property values. (c) An evaluation of whether a shift to consumption-based taxes would make Florida more attractive to businesses compared to other states. (d) An analysis of the potential impact of eliminating property taxes on overall economic stability, consumer behavior, and long-term economic growth. By October 1, 2025, the office shall submit a report detailing the study’s findings to the President of the Senate and the Speaker of the House of Representatives. 33 Section 2. This act shall take effect July 1, 2025.
It’s pretty self-explanatory save one thing. The four chapters of the Florida Statues cited in the bill. The long story short on those, is that the bill does call for an evaluation of the elimination of property taxes on all property types.
While we don’t have the answers to all the questions and considerations you’ve posed, hence the purpose of starting this process with what amounts to a feasibility study to determine the potential implications, I want to address one of the concerns expressed in your note. The implications pertaining to commercial properties.
While homestead protections have been great for homeowners, the lack of protections for commercial properties, and thus business owners, has created enormous affordability challenges for many businesses. The current system has continued to shift the property tax burden to the commercial property side overtime. Many of the empty commercial property buildings you see aren’t vacant because the locations aren’t viable. They’re vacant because the cost of operating businesses in those locations isn’t viable. This dynamic is also a major contributing factor to the dramatic increases in rent rates we’ve seen in recent years as well.
While homesteaded property taxes are capped at 3% increases annually, non-homesteaded properties can and often have seen maximum increases of 10% per year. With Florida’s surging property values over the previous ten years, we’ve seen a significant shift in the tax burden being placed on our businesses and non-homesteaded properties. I’ll pick up there in tomorrow’s Q&A.