Florida is known for having no state income tax and attracting homebuyers from all over the U.S. Now, Governor Ron DeSantis is taking it one step further by proposing the elimination of property taxes altogether. But can Florida really afford to get rid of property taxes?
According to Bloomberg’s Jonathan Levin, this proposal is more like a political move than a practical solution. In a recent segment, Levin described it as a classic populist line and he also expressed skepticism about its feasibility. While the idea may sound appealing, especially to potential homeowners and investors, Levin warns that it could come with serious consequences.
So what would happen if property taxes disappeared? “The prices of already elevated homes and condominiums are going to skyrocket,” Levin said. In other words, eliminating property taxes might make homeownership even less affordable in the long run.
Financial firm Baird also weighed in, saying that cutting property taxes “could expand the universe of new homebuyers considerably,” but may result in “new (and higher) MBS spread equilibrium.”
As Levin points out, Florida already lacks a state income tax, so property taxes are a key source of revenue, especially for critical needs like climate adaptation in a state facing rising sea levels and increasingly intense hurricanes.
“If you cut off that revenue source,” Levin said, “how are you going to manage this existential question?” His answer: “You’re not.”
Housing, Insurance, and Affordability
Florida’s real estate market is under pressure. There’s high demand, but also rising insurance costs and construction challenges. “It’s becoming more and more a state for people with means,” Levin said, “and more and more of an impossible situation for everybody else.”
The idea of eliminating property taxes might sound like a dream to some. But for now, it remains a political talking point without a clear financial plan to back it up. Whether this proposal gains traction or fades away, it’s another sign that housing policy in Florida is likely to remain a hot topic in 2025.
