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Journal of Property Tax Assessment & Administration

Abstract

Local Florida governments are primarily funded by ad valorem property tax revenues. State law provides preferential tax treatment to primary resident homeowners, as opposed to the owners of rental properties or winter homes. This “Homestead” exemption reduces the assessed taxable value of the property, and caps annual increases. By Florida statute, a home cannot legally be simultaneously Homesteaded and rented out long-term. We combine January 2022 Trulia.com home rental data with county appraiser Homestead status data and find that larger rental homes are more likely to be Homesteaded. Our results suggest that Florida municipalities may be able to recoup needed funds, which could go towards education and other important priorities, by tightening Homestead tax rule enforcement. We also consider the possibility that income disparities may be exacerbated by Homestead fraud, and that the system lends itself to inherent fragility akin to the problems that precipitated the 2008 housing crash.

Keywords

Homestead exemptions - fraud; Tax evasion

Notes

We would like to thank Adam LaPorte and Jessica Miranda for outstanding and tireless research assistance. We would also like to thank Young Baek and Yuliya Yurova for helpful comments and suggestions.

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