What Eliminating Property Taxes Could Mean for Lenders and the Florida Real Estate Markets

Guest Editorial by Christopher Duffy, Founder and CEO, Hummingbird Development

Initiatives aimed at cutting taxes are always more complex than they appear on the surface, and the recent proposal to eliminate property taxes in Florida is no exception. The proposal, which is known as the “Save our Homes from Excessive Property Taxes” amendment, promises to grant certain Florida residents a significant discount on their residential property taxes.

Christopher Duffy, Founder and CEO, Hummingbird Development.

In a press release issued in May 2026, Florida Governor Ron DeSantis said “Florida homeowners need relief” and that the amendment would be part of his administration’s efforts to “stand up for taxpayers, enact a historic reform, and save the home of every Floridian.” But to say, as Governor DeSantis suggests, that the measure should be welcomed by homeowners ignores its potential downsides.

Many homeowners would benefit from the changes the measure contains. Specifically, it would extend the state’s $50,000 homestead tax exemption to $150,000 during the first year and $250,000 during the second year, with annual increases indexed for inflation after that.

However, those same homeowners could find themselves facing a lack of municipal services, as the measure does not stipulate how the lost tax revenue would be replaced. Additionally, the measure could lead to an increase in other costs related to home ownership, such as insurance premiums, that could offset the tax savings.

With the amendment headed to a public vote in November 2026, it’s valuable to look now at all the parties it would impact, including homeowners, those seeking to become homeowners, and the lending institutions that would make homeownership possible.

How would tax relief impact the Florida real estate market?

When property taxes go down, the monthly payments on a mortgage go down. Consequently, the tax change Florida is proposing would make homeownership more accessible for a large number of Floridians. If the state’s renters see the change as an opportunity to buy, it could trigger a buying frenzy that could drive up prices in the Sunshine State.

Eliminating taxes could also inspire buyers to purchase more expensive properties. If 10% to 15% of a mortgage payment is typically taxes, removing that cost from the mortgage equation could free up buyers to shop for larger homes or homes in nicer neighborhoods. Cash-to-close amounts would also change if the measure is passed, which would make it easier for those with low cash reserves to enter the housing market.

Out-of-state home buyers would be the only ones not to benefit from the change, at least not initially. As proposed, the measure would not apply to those who were moving from another state until they had been in their Florida home for five years.

How would tax relief impact mortgage lenders?

As mentioned above, reducing property taxes changes the math of mortgage payments. For lenders, that means gaining the capability to approve higher mortgage amounts for in-state buyers. Essentially, many borrowers seeking mortgages who were previously below the qualification threshold would be eligible for loan approvals due to the decrease in tax obligations.

However, before easing access to mortgages, lenders would need to consider the impact that the loss of tax revenue could have on property risk. If municipalities are left without the funding they need for fire departments, flood control, or other neighborhood infrastructure needs, it could lead to higher insurance premiums. That type of shift would reclaim the mortgage savings gained through lower tax obligations.

Lenders would also need to consider the practical implications of a tax change that will be implemented incrementally. The phased approach, with the homestead exemption rising from $150,000 to $250,000, then increasing annually with inflation, would make escrow analysis a challenge. Lenders will be forced to constantly recalibrate escrow accounts to avoid creating shortages or overages.

The different treatment of in-state and out-of-state borrowers would also present administrative hurdles. Rather than strictly relying on traditional statewide tax estimators, lenders would need to conduct research on applicants’ residency history. And mortgages granted to those buying homes prior to the five-year mark would need to be recalibrated once that mark was reached.

Is it likely that other states would enact similar tax measures?

The biggest hurdle to making this type of tax relief viable is finding an alternative source for tax revenue. In most states, that hurdle is high enough to make such a proposal impractical. Florida, however, could clear the hurdle.

Florida is a unique economy relative to the rest of the country. Heavy tourism and high concentrations of retirees make the tax base substantially different than it is in the rest of the country. As a result, Florida is in a position to pass the tax burden to the tourism and travel industries, which is a more resilient expense than housing costs. In other states where those types of revenue sources aren’t available, this kind of proposal would likely not be entertained by lawmakers.

Still, approving this type of provision puts Florida on a slippery slope in terms of tax stability. The burden of making up the revenue will fall on individual jurisdictions, which means police departments, road servicing infrastructure, and community programs will be the ones losing revenue if the gaps aren’t filled somehow.

The good news is making up tax revenues is something the government is quick to do. Anytime tax cuts of any substance have been implemented, the states putting them in place have always found a way to make up the difference somewhere else.

The bad news is finding the right “somewhere else” can be tricky. As mentioned above, recovery efforts would likely shift tax revenue from homeowners to tourists, but that poses risks of its own. Just ask Las Vegas, where the government is finding out there is a limit to how high they can raise prices before tourists start seeking entertainment somewhere else.

When it comes to identifying the winners and losers in Florida’s tax amendment, it may be too early to do so confidently. In the short term, very few would be frustrated by lower taxes. Home buyers would have more buying power, home sellers would have more interest, and lenders would be able to approve more mortgage applications. But in the long term, homeowners and their mortgage lenders could end up investing in property that can’t hold its value because of the loss of local services.

It seems that making the proposal work will require showing voters where the new funds will come from. If DeSantis and Florida’s lawmakers can’t do that, it’s likely the amendment will remain an interesting, but not viable, idea.

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– Christopher Duffy, Founder and CEO of Hummingbird Development, is a residential real estate developer based in Northern California. His expertise is focused specifically on residential construction, real estate investment, California real estate, and remodeling costs and trends. He operates within a vertically integrated model, overseeing acquisition, design, construction, and sales in-house. Through his work, Duffy has contributed to the development and redevelopment of over 100 homes, including single-family residences, townhomes, and villa-style projects. His approach emphasizes disciplined underwriting, strategic value-add improvements, and cost-efficient construction. He is primarily focused on executing projects that balance functional design, construction quality, and investor returns