New Homestead Exemption Raises Stakes for Establishing Florida Residency Before Year-End

Florida voters approved Amendment 3, expanding the state's homestead property tax exemption and creating an important year-end planning opportunity for individuals and families considering a move to Florida.

Beginning in 2027, the exemption for non-school property taxes will increase to $150,000 of assessed value. It will rise to $250,000 in 2028 and adjust for inflation thereafter.

For individuals considering Florida residency, however, the key issue is not only the size of the exemption, but when they establish Florida as their permanent residence.

The increased exemption generally will be available to qualifying homeowners who maintained a permanent residence in Florida as of December 31, 2026. A person who establishes Florida permanent residence after that date generally will receive the existing exemption initially and become eligible for the increased exemption beginning with the fifth year in which the person receives the homestead exemption. Thus, rental years after the cutoff do not appear to count toward the five-year period for a post-cutoff resident because the constitutional text measures the period by years of exemption.

Importantly, the December 31 test concerns the individual's permanent residence in Florida, not ownership of the property that later receives the homestead exemption. An individual who genuinely establishes Florida permanent residence by December 31, 2026, while living in a leased or other residence would generally therefore be eligible for the increased exemption upon later acquiring and qualifying a Florida homestead without first completing five years of homestead exemption. The individual must still satisfy the ordinary ownership, occupancy, January 1 filing and documentation requirements for the property. Implementing legislation is expected to establish uniform procedures for proving the individual's December 31, 2026, permanent-residency status.

For individuals and families who already own a Florida residence, split their time among multiple homes, rent in Florida while considering a later purchase or are otherwise considering a move, now is the time to plan. Establishing Florida residency can affect not only property taxes but also broader domicile, income tax, estate planning, trust and asset-protection considerations.

December 31 Is More Than a Filing Deadline

The December 31 deadline is not simply a paperwork or home-purchase deadline. The relevant question is whether Florida has actually become the individual's permanent home. That is a factual determination based on the individual's intent as demonstrated by objective conduct and records; no single step is conclusive. The residency-based cutoff also avoids forcing individuals who genuinely move to Florida before year-end to purchase a home immediately merely to preserve access to the increased exemption.

Whether an individual maintained a permanent residence in Florida by December 31, 2026, will depend on the individual's actual living arrangements, intent and supporting records. Existing Florida law identifies several relevant factors, but no single document or action is necessarily conclusive. Implementing legislation and administrative guidance are expected to address how individuals, including renters who later acquire a Florida homestead, must substantiate their permanent-residency status as of the cutoff date.

Relevant steps may potentially include:

• actually occupying a Florida residence as the principal home
• recording a Florida declaration of domicile
• obtaining a Florida driver's license and relinquishing other-state licenses
• registering to vote and registering vehicles in Florida
• moving employment, banking, tax-return, mailing, financial and legal records to Florida
• enrolling dependent children in school
• paying utilities at the Florida residence
• addressing conflicting residency or homestead claims in another state

A Florida declaration of domicile, driver's license or voter registration may potentially support the claim, but paperwork alone will not establish permanent residency if the individual's actual living arrangements and other connections tell a different story. A person planning to meet the December 31 cutoff would need to create a contemporaneous and consistent record showing establishment of a permanent home in Florida and termination of the prior permanent residence.

Establishing Florida permanent residency and qualifying a particular property for the homestead exemption are related – but separate – questions. The cutoff does not require ownership of the eventual homestead property by December 31, 2026. To obtain the exemption for a particular tax year, however, the applicant ordinarily must hold legal or beneficial title and in good faith make the property the applicant's permanent residence as of January 1 in addition to satisfying the applicable filing and documentation requirements. Property held through a trust or other ownership structure should be reviewed before assuming it qualifies.

Planning for Second Homes and Investment Property

Amendment 3 also reduces the maximum annual increase in assessed value for certain non-homestead property from 10 percent to 5 percent for non-school taxes beginning in 2027. The change may provide meaningful long-term benefits for owners of Florida second homes, rental properties, and commercial or investment real estate.

Ownership planning matters. The property may be reassessed at market value following certain sales, ownership or control changes, or improvements. Before completing a sale, gift, trust transfer, family transaction, entity restructuring or other change involving Florida real estate, clients should consider whether the transaction could reset the property's assessment. Buyers likewise should not assume the seller's existing property tax bill will continue after closing.

Plan Now, Even as Rules Develop

Gov. Ron DeSantis has announced plans to call a special legislative session to address implementation of Amendment 3 and related property tax measures.

Clients considering a move to Florida should not wait for every administrative detail before beginning to plan. The December 31, 2026, permanent-residency date is part of Amendment 3, and the operative text distinguishes residents based on whether they maintained a permanent residence in Florida by that date, rather than whether they already owned or claimed homestead on the property that will later receive the exemption. The amendment directs the Florida Legislature to prescribe uniform procedures for administering the new provisions. Those procedures will be particularly important for individuals who establish Florida permanent residence by the cutoff while renting or otherwise not yet claiming a Florida homestead because they may need to document that status years later.

For many private wealth clients, that planning extends well beyond changing a driver's license or filing a declaration of domicile. A coordinated plan may need to address:

• when a Florida residence becomes the principal residence
• which ties to another state should be reduced or terminated
• how a future Florida homestead will be owned
• whether existing trusts or estate-planning documents should be reviewed
• whether financial accounts, mailing addresses, voting records, vehicle registrations, tax returns and other records should be updated

Key Takeaways

• Considering a Move to Florida? Begin planning now so your actual residence, prior state exit and supporting records consistently establish Florida as your permanent home by December 31, 2026.
• Renting Now and Buying Later? The cutoff turns on Florida permanent residence, not ownership of the eventual homestead. A person who genuinely maintains a permanent residence in Florida by December 31, 2026, should be eligible for the increased exemption upon later acquiring and qualifying a Florida homestead but should preserve contemporaneous evidence of residency and monitor the implementing procedures.
• Already Living in Florida? Confirm that your residency records and any existing homestead filing support eligibility for the increased non-school exemption.
• Own Other Florida Real Estate? Review the new 5 percent cap before completing a sale, gift, trust transfer, improvement, acquisition, or entity restructuring or change that could reset the assessment.
• Coordinate the Bigger Picture. Florida residency can affect more than property taxes. The analysis should fit within your broader domicile, income tax, estate planning, trust and asset-protection strategy.

Holland & Knight's Private Wealth Services Group and Family Offices Group can help individuals and families plan and document a move to Florida, evaluate homestead eligibility and ownership structures, address multistate domicile considerations and review Florida real estate transactions under the new rules. With December 31, 2026, approaching, clients considering Florida residency should begin that review now.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.