Most Florida buyers have heard of the Save Our Homes cap, which limits annual assessment increases to 3% on a primary residence with a homestead exemption. Fewer buyers know that a similar — but less generous — protection exists for everything else: investment properties, vacation homes, short-term rentals, condos you don’t live in full-time, and commercial real estate. It’s called the Non-Homestead Assessment Cap, and it caps the annual increase in a property’s assessed value at 10% per year, excluding School Board levies.
Florida voters approved the Non-Homestead Cap in a 2008 constitutional amendment, and it’s been in effect since the 2009 tax roll. It applies automatically — there’s no application to file, unlike the Homestead Exemption, which a homeowner has to actively claim with their county property appraiser. If you’re buying a second home, a condo you’ll rent out, or a property for a short-term rental business, you don’t need to do anything to get this protection; your county appraiser applies it for you each year.
There’s an important catch for buyers to budget around: the cap resets when a property changes ownership. In the first year after you close, the assessed value is set equal to the just (market) value — essentially what the appraiser believes the property is worth — not whatever capped assessment the previous owner was paying. From that point forward, the assessed value can rise no more than 10% a year until the next sale or a qualifying improvement. For non-residential and larger properties, a substantially completed improvement that increases just value by 25% or more also resets the cap. In practice, this means your first full tax bill as a new owner is usually a truer reflection of current market value than what you may have seen on the seller’s prior tax bill — a common surprise for buyers who budgeted off the previous owner’s property tax line instead of the purchase price.
For South Florida investors building a rental portfolio — including short-term rental hosts — this cap still matters even without a homestead exemption: it puts a ceiling on how fast your assessed value, and therefore your county and municipal tax burden, can climb year over year once you’re past that first reset. Combined with Florida’s lack of a state income tax, it’s one more reason investment property here can pencil out well over a multi-year hold, provided you underwrite the first year using current market value rather than the seller’s old assessment.
A couple of practical notes: moving from a non-homestead classification into a homestead exemption (say, you buy a second home and later make it your primary residence) removes the Non-Homestead Cap in favor of Save Our Homes’ 3% limit. And because the cap is a creature of state law (Florida Statute 193.1554) applied by each county’s property appraiser, it’s worth confirming the current assessed value and any pending reset directly with the appraiser’s office for the county where you’re buying — Broward, Miami-Dade, and Palm Beach each publish their own lookup tools. This article is general information, not tax or legal advice; for a transaction-specific estimate of what your tax bill will look like in year one, talk with a CPA or your closing attorney before you write an offer.
If you’re evaluating an investment property, a condo, or a second home in Broward or Miami-Dade and want help running the numbers before you make an offer, our team at Ne Plus Ultra Real Estate is happy to walk through it with you.