Florida Property Tax Revenue Breakdown: Primary Homes vs Commercial and Investment Properties

Florida’s property tax system is under review, and recent data sheds light on who pays what. According to preliminary 2025 figures, 64% of Florida’s property tax revenue comes from properties that are not primary residences. This includes second homes, vacation rentals, commercial properties, and investment real estate. Only 36% of statewide property tax revenue is collected from homestead properties, or primary residences.

Governor Ron DeSantis recently stated that “68 to 70% of property tax revenue statewide” comes from non-homestead properties, including second homes, investment properties, commercial properties, and short-term rentals. PolitiFact confirmed his estimate as mostly accurate, reviewing data from the Florida Policy Institute and the Florida Legislature’s Office of Economic and Demographic Research.

How Florida’s Homestead Exemption Affects Tax Revenue

Florida’s homestead exemption reduces the taxable value of a primary residence by up to $50,000. This exemption, combined with caps on annual assessment increases, makes homeownership more affordable for residents but also shifts more of the property tax burden to non-homestead properties.

Matt Caldwell, the Lee County property appraiser and a former Republican lawmaker, confirmed that about two-thirds of property taxes in Florida are paid by non-homesteaded properties. He noted that the exact percentage can vary based on market conditions and changes in property values.

For commercial property owners, investors, and vacation rental operators, this means carrying a larger share of the local tax base. As Florida’s population and tourism sectors continue to grow, demand for both commercial and residential rental properties remains strong, but so does the tax exposure for owners of non-homestead real estate.

James Moore’s real estate advisory team helps property owners and investors assess tax obligations, plan for cash flow, and structure investments to manage long-term profitability.

What Eliminating Property Tax on Primary Residences Could Cost

State leaders have discussed overhauling Florida’s property tax system, with some proposals focused on reducing or eliminating property taxes on primary residences. The Florida Policy Institute estimated that ending property taxes for homestead properties would cost approximately $18.5 billion annually. This breaks down to $7.8 billion for counties, $3 billion for cities, and $7.7 billion for school districts.

If this revenue is not replaced, local governments would face significant budget shortfalls. Esteban Leonardo Santis, research director at the Florida Policy Institute, warned that local governments would need to offset the revenue loss through reductions in public services, new or increased local taxes or fees, or a combination of strategies.

According to the National Association of Counties, property taxes are the largest source of revenue for most county governments, funding services like law enforcement, fire departments, emergency management, and infrastructure maintenance. Any major shift in how property taxes are collected could have wide-reaching effects on service delivery.

Potential Revenue Replacement Options and Their Impact

If Florida were to reduce or eliminate property taxes on primary residences, the lost revenue would need to come from somewhere. Options include raising the state sales tax, increasing corporate income taxes, or shifting more of the property tax burden to non-homestead properties. Each option carries its own set of trade-offs.

Raising the sales tax would affect all consumers, including renters who would not benefit from property tax relief on primary residences. Increasing corporate income taxes could discourage business investment. Shifting more of the tax burden to commercial and investment properties could increase operating costs for businesses and rental property owners, potentially leading to higher rents or reduced investment in new development.

Matt Caldwell noted that part of the challenge is defining what counts as property tax. Some taxes are levied based on a property’s assessed value, while others are not value-based but still appear on tax bills. For property owners, the distinction may not matter much since they view property tax as the total amount they owe each November.

James Moore provides tax planning and consulting services to help real estate clients understand their tax obligations, evaluate the impact of policy changes, and structure investments in ways that support long-term financial goals.

What Florida Property Owners Should Consider

For commercial property owners, real estate investors, and vacation rental operators, these discussions are worth monitoring. Any significant change to Florida’s property tax system could affect operating costs, investment returns, and cash flow projections. Understanding how much of the local tax base is supported by non-homestead properties can help inform decisions about where to invest and how to structure ownership.

Property owners should also consider how local governments might respond to revenue shortfalls. Reductions in services, changes to zoning or permitting processes, or new fees could all affect property operations and valuations.

For now, Florida’s property tax system remains in place, but the conversation about reform is ongoing. Staying informed about potential changes and understanding the current distribution of tax revenue can help property owners and investors make better decisions.

Florida’s property laws and regulations are complex—our team helps you stay compliant while protecting your investments.

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