Homestead in Florida: The Cap Is Worth More Than the Exemption

The Exemption, Band by Band

The exemption comes in two bands, set by section 196.031 of the Florida Statutes. The first band removes $25,000 of assessed value and applies to every levy on the bill, school taxes included. The second band applies to assessed value above $50,000 and skips the school district levies entirely. Florida voters indexed that second band to inflation in November 2024, so the Department of Revenue now adjusts it each January. For 2026 the adjusted amount is $26,411, which brings the combined exemption to $51,411.

The dollar value depends on the local millage, because the exemption removes taxable value rather than tax. A Town of Palm Beach parcel pays 14.8690 mills on the 2025 final stack, with 6.3210 going to the schools. The full exemption is worth $597 a year there. In West Palm Beach, at 20.4468 mills, it is worth $884. The exemption is the same fixed amount on a cottage and on an oceanfront estate, which is why it barely registers at seven and eight figures. The table carries the arithmetic.

Save Our Homes, the Cap

Save Our Homes is the assessment cap that comes with the exemption, carried in section 193.155 after a 1992 constitutional amendment. Once a home is homesteaded, its assessed value can rise by no more than 3 percent a year. If the Consumer Price Index rose less, the smaller number governs. The Department of Revenue publishes the binding number each January. For 2026 the cap is 2.7 percent, and for 2025 it was 2.9.

The inflation years showed the cap's force. Consumer prices rose 7.0 percent in 2022 and 6.5 percent in 2023, and capped assessments rose 3.0 percent in each. Per the Florida Department of Revenue's published caps, a continuously homesteaded assessment could rise no more than 15.5 percent in total from 2022 through 2026. Market values in the Palm Beach County luxury corridor rose far more over the same stretch. The cap protects every levy on the bill, school taxes included. The gap it opens between market value and assessed value belongs to the owner for as long as the home is held.

A sale closes the gap. Florida resets assessed value to market value on the January 1 after a change of ownership. A new owner starts a cap of their own the year after their homestead is granted.

The Cap at $5 Million and $20 Million

Arithmetic shows what the cap is worth at luxury prices, so here it is, footed and dated. Assume a buyer closes at $5 million and homesteads for the following tax year. The market then rises 8 percent a year while the cap holds at its 3 percent ceiling. These are model numbers, not a forecast. After five years the home carries a market value of $7,346,640 and an assessed value of $5,796,370. The difference is $1,550,270 of value the tax bill never sees. At the Town of Palm Beach rate that protection is worth $23,051 a year, and it grows every year the owner stays.

Scale is the whole story at $20 million. The exemption still returns a few hundred dollars, the same as it would on a bungalow. The cap scales with price. Under the same model the ten-year gap reaches $16,300,172, worth $242,367 a year at the same rate. Figures that size are why luxury owners file on time, and why capped homes change hands less often than uncapped ones.

The 10 Percent Cap on Everything Else

Second homes and investment property carry a weaker shield. The Florida Constitution caps assessment growth on non-homesteaded property at 10 percent a year, implemented in sections 193.1554 and 193.1555 of the statutes. School district levies sit outside that cap entirely, so the school share of a second-home bill tracks market value with no ceiling at all. No filing is required, the cap attaches on its own, and it resets when the property changes hands. A 10 percent ceiling binds only in years when values jump by more than 10 percent, which the coastal markets last did in the 2021 to 2022 run. In a normal year it is close to no protection.

Portability, the Moving Benefit

Portability lets an owner carry the cap's accumulated benefit to the next Florida homestead. The benefit is the difference between market value and assessed value on the old home, and up to $500,000 of it transfers under section 193.155(8). Moving up carries the difference dollar for dollar, to the ceiling. Moving down carries a proportional share, so the new assessment is reduced by the same percentage of value the old benefit represented. The window is strict: the new homestead must be established by January 1 of the third year after the old one is abandoned, per the Palm Beach County Property Appraiser.

At luxury prices the ceiling binds almost immediately. An owner whose island home carries an $8 million market value against a $5 million assessment has built $3 million of benefit, and $500,000 of it moves. The rest dissolves at the sale. The transfer still matters, because the carried benefit keeps its own cap from the first year in the new home.

The Two Dates That Establish It

Homestead runs on two dates, both in section 196.011. January 1 is the status date, meaning the home must be your permanent residence on that day for that year's benefits. March 1 is the filing deadline with the county property appraiser. The sequence matters for a buyer. A closing in June 2026 cannot be homesteaded for 2026, because the seller's status governed on January 1. The buyer's first homestead year is 2027, filed by March 1 of that year, and the buyer's own cap begins compounding the year after the exemption is granted.

Residency is shown the usual ways, through a Florida driver license, a voter registration or a declaration of domicile. Title form matters as much as residence, because a qualifying trust can homestead while an LLC generally cannot. The sequencing playbook sits in our domicile and homestead guide and the title analysis in our piece on holding title.

What Homestead Does Not Do

The word homestead does more work in conversation than in the statute, so the limits deserve their own ledger. The exemption's second band never reduces school district taxes, and the school lines run 6.3210 mills of every Palm Beach County stack. The cap does cover school levies, but it caps assessed value, not the bill. Millage still applies in full, and a taxing authority that raises its rate raises a capped bill too. The rates themselves, authority by authority, sit in our county property tax guide.

Non-ad valorem assessments sit outside all of it, because neither band of the exemption nor either cap reduces a per-parcel line. Nothing survives a sale: exemption, cap and accumulated benefit reset when ownership changes, portability aside. The cap can also run in reverse. Under the state's recapture rule an assessment keeps rising by the year's cap until it reaches market value, even in a year when the market falls.

The November 3 Vote

Florida votes on the largest homestead rewrite in a generation on November 3, 2026. The Legislature's CS/HJR 1F would exempt the first $150,000 of assessed value from non-school levies beginning January 1, 2027, rising to $250,000 in 2028 with inflation adjustments from 2029. It would also cut the non-homestead cap from 10 percent to 5 percent, and residents arriving after January 2027 would wait five years for the enhanced tiers. The amendment needs 60 percent approval to pass. Nothing on this page changes unless it does, and this page will be restated if it passes.