The Non-Homestead Cap in Florida: The 10 Percent Rule for Rentals and Second Homes
The non-homestead cap Florida gives rentals and second homes limits assessed value growth to 10 percent a year. It is weaker than Save Our Homes and resets at sale, which changes your payment.
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The non-homestead cap Florida applies to rentals, second homes and commercial property limits assessed value growth to 10 percent a year.
It is weaker than the 3 percent homestead cap and it resets when the property sells. Our property tax calculator estimates the first-year bill.
The two caps
Homestead property: assessed value growth capped at 3 percent or inflation, whichever is lower.
See our guide to the Florida homestead exemption.
Non-homestead property: capped at 10 percent.
The Florida Department of Revenue explains both.
The 10 percent cap does not apply to school district taxes.
What resets at sale
The assessed value jumps to market value the January after a sale.
The cap then applies to future growth from that new base.
See our guide to property tax estimates for new buyers in Florida.
The seller's tax bill tells you nothing about yours.
Estimate from the purchase price.
Why lenders care
The escrow account is set from the current bill, which reflects the old cap.
See our guide to escrow accounts in Florida.
The first reassessment produces a shortage and a payment increase.
Underwriters estimate taxes on the new value for qualifying at some lenders.
Ask which figure the lender used.
Investors
A rental never gets homestead.
The 10 percent cap is the only protection.
See our guide to how to buy a rental property in Florida.
In a rising market the assessed value can climb 10 percent every year until it catches market.
Underwrite the rental with rising taxes.
Second homes
A snowbird's Florida home is non-homestead unless it becomes the primary residence.
See our guide to snowbird second home mortgages in Florida.
The 10 percent cap applies.
Moving here full-time and filing for homestead switches caps.
The switch does not reset the base.
Converting a rental to a homestead
Move in, file by March 1, and the 3 percent cap starts from the current assessed value.
The base does not reset downward.
Any prior cap benefit carries forward.
The exemption itself also reduces taxable value.
This is a common move for owners who retire into a former rental.
Converting a homestead to a rental
Renting out your homestead ends the exemption and the 3 percent cap.
The assessed value resets to market the following January.
See our guide to converting a primary residence to a rental in Florida.
The tax increase can be steep after years under the cap.
Model it before you decide.
Portability does not apply
Homestead portability lets you carry cap savings to a new homestead.
Non-homestead property has no portability.
The cap benefit dies at sale.
A buyer starts fresh.
Price the purchase with that in mind.
Cash flow on a rental
Taxes are the largest rising expense on a Florida rental.
See our guide to using rental income to qualify in Florida.
The 10 percent cap slows the climb but does not stop it.
DSCR ratios calculated on the old tax bill overstate the cash flow.
Use the reassessed figure.
Appeals
You can challenge the market value the appraiser sets.
See our guide to property tax appeals in Florida.
The cap applies to whatever value survives the appeal.
A successful appeal in year one lowers the base for every later year.
It is worth more on non-homestead property because of the weaker cap.
Multi-unit properties
A duplex you live in gets homestead on your unit's share only.
See our guide to house hacking in Florida.
The rental units are non-homestead.
The appraiser splits the value.
Two caps run on one parcel.
Commercial and mixed-use
The 10 percent cap covers commercial property too.
See our guide to mixed-use property loans in Florida.
School taxes are uncapped for all non-homestead property.
Commercial lenders underwrite taxes on reassessed value.
Ask for the millage breakdown.
New construction
The first assessment after completion captures the full value.
There is no cap benefit yet.
See our guide to new construction mortgages in Florida.
The builder's tax bill covered land only.
The jump is the largest in year one.
Estimating your bill
Purchase price times the county's assessment ratio, times the total millage.
Add non-ad valorem assessments like CDD fees.
See our guide to CDD fees in Florida.
The county property appraiser's site has an estimator.
Use it before you offer.
The constitutional amendment
The 10 percent cap came from a 2008 amendment and was made permanent in 2018.
It can only change by another amendment.
Proposals to lower or raise it appear periodically.
Watch the ballot.
The homestead cap is older and more entrenched.
Checking the numbers each August
The county mails a TRIM notice in August with the proposed assessment and millage.
It shows the capped value and the market value side by side.
The appeal deadline runs from that notice, usually 25 days.
Read it on a rental as carefully as on your home.
The escrow analysis follows the November bill.
Where to start
Look up the parcel and note the current assessed and market values.
Estimate the reassessed bill from your purchase price.
Then get a pre-approval with that tax figure in the payment.