The Landlord Lens - Ron DeSantis to Abolish Property Taxes in Florida?

Episode Date: March 14, 2025

Could Florida really eliminate property taxes? Governor Ron DeSantis has floated major tax policy changes that could shake up the housing market. What would this mean for landlords, tenants, and homeowners? In this episode, we break down the facts, the potential impact, and whether this is just political talk or a real possibility.🔹 How would Florida replace property tax revenue?🔹 What does this mean for real estate investors?🔹 Could other states follow suit?____

What's your worst case scenario here? I think it continues to separate the haves from the have-nots. How do you think it actually works? Well, I think they will need to lift sales tax. Ballpark guess. What percentage chance you think it happens? I definitely wouldn't flip a coin. So it's definitely not 50-50.

Hello and welcome to 2025, the year where apparently anything is possible, including eliminating property tax. You may have heard Ron DeSantis has been on a bit of a circuit talking about a limit. eliminating property tax from Florida. This is interesting because Florida is also one of the states that does not have a state income tax. The three main ways you make money as a state is property taxes, income tax, or sales tax. And Florida already has one of the highest sales tax in the nation.

So kind of a very interesting laboratory of democracy moment we're seeing play out here this year, Seamus. What do you think? Yeah, this one's interesting because I'm actually really skeptical. as to whether or not this could work, especially on a grand scale and in a state like Florida, like you said, without that state income tax, I don't know how exactly they're going to thread the needle from a revenue standpoint. I'm also not certain that it's going to provide the big win that asset holders, homeowners, landlords actually think it will in that housing

prices are going to increase a great deal. And I think purchasing those areas is going to be really challenging. Yeah, challenging in the future, but not for our viewers who are watching this today and considering maybe where they're going to buy their next rental property. And you know, you say you don't think this is going to happen. I mean, at what point do you think the Florida lawmakers and Ron DeSantis stop? Stop pushing it? Yeah. Well, the thing about the property tax is it's up to the individual municipalities, right? And so I think a couple individuals will get on the van wagon will run on a platform. I actually hope this happens. I hope they run on a platform of reducing property taxes in local city, local county municipality. And we see how it works.

I think the wonderful thing about the United States is we have this opportunity to run these mini little experiments, right? With the power being left to the states and even push down further to the local government, I really hope this does happen so we can see what the impact is. I'm just really suspect that it's something that works for every county in every area in a state like Florida or any other state in the United States, honestly. But I don't think that's what Ronda Santis wants. I don't think he wants county level decision makers to do this. I think he wants to make it zero across the whole board. That's at least how he's talking about it.

So, I mean, do you think he's just going to water down the proposal, lose the political points, and say, hey, you guys down there? do what you will. Let's see how it works county by county. Because we've never experienced before politicians maybe throwing out ideas, getting a little feeler out there, then seeing what the general reaction is. I'm curious, John, how do you think it will work, right? Let's say he does stay on his horse. He gets a 0% property tax. What do you think that impact's going to be once we're cutting, you know, 50 to 60% of the revenue to school districts? Maybe we're relying on something like an increased sales tax, which can fluctuate up and down with things like natural disasters, tourism seasons, right, recessions and inflation. So as you start thinking about it, other than it sounding sexy, as a property holder at the time, how do you think it actually works?

Well, I think they will need to lift sales tax. That seems really obvious. I don't think Ron DeSantis is going to or the Florida legislature is going to introduce a state. income tax. I think he's trying to attract people, right? So I think a moderate increase in the sales tax is probably going to happen. Florida already has 80% of their revenue, at least according to the Florida Policy Institute, comes from sales tax already. So it's not plugging a giant hole in in terms of like 60% are coming from property taxes or something, only 20%. So a lift in sales tax of, you know, two, three percentage points might be able to plug the gap altogether. And yeah,

obviously the sales tax in Florida is pretty high, right? 6% is pretty high. We live in Colorado. We're very lucky until we drive up to Vail and it's super duper expensive to buy anything up there. But I think you can plug the hole that way and see what happens. I'm very, and I will say, to address your fluctuation point, this is 2025. Who knows what can happen here? And, you know, that governor, Mr. DeSantis, has a warm relationship.

I would say with Donald Trump, they're ideologically aligned. I could see natural disaster hits, suddenly sales tax plummets in a month. I could see the federal government stepping in and plugging the hole. Yeah, that's an interesting idea to kind of cover for that fluctuation. I think the challenge with any consumption-oriented tax like sales tax is it disproportionately hurts individuals that are low-income, right? And so I do think that there's a balancing act as to what that impact is. The proofs in the pudding, right, over the last two, three years when we've had really high inflation, who has it hurt?

Right. It hasn't hurt a lot of the asset owners, which, once again, we're speaking about with property holders. It actually has hurt individuals that aren't making their already shoestring budget just go a little bit, or fall a little bit shorter and shorter each and every month. And so I think that's a primary concern when you're talking about increases in sales tax statewide, at least. Yeah. Yeah, I think that's a very fair point. And I'll concede it. Like, this will be tough for the little guy. It'll disproportionately impact the little guy. In fact, in order to help the asset owners. I think it's a challenging topic, but a really compelling idea because it flies in the face of how America's operated for 200 years, where property taxes have funded local institutions. But it's still a compelling idea to imagine a world where, where, where, we're not paying rent for the property we own to the government. Because I think, you know, myself, others, definitely a lot of our landlords feel like paying rent to the federal government for a property you bought and purchased.

Feels kind of wrong. And a world where that might not be necessary to keep the school running down the street is a world that I think a lot of a lot of rental property owners want to live in. Yeah, sign me up for that. hard to disagree at this point and i'll tell you what my hope is actually i hope that this idea spreads beyond florida and that there's a number of local governments that actually pursue it i i really would love to see it happen right here in northern colorado so that i have kind of a front row seat to see what happens as property tax gets eliminated or at least someone approach property

of tax to this idea is we're going to cut it as low as possible right and really play that game of balancing where there's efficiency gains maybe in local government, where the revenue is going to come in from things like sales tax to really reduce property tax and see what it does. Yeah. What do you think it'll do? Let's say this actually happens. What do you think is going to happen? What's your worst case scenario here?

So I don't know that there's necessarily a worst case scenario for landlords like myself. I actually think it's wildly beneficial to buy properties in those areas. I think it continues to separate the haves from the have-nots. I think the increased demand in housing in those locations is going to make it harder for individuals to actually get their first primary. Yeah. Right. Become homeowners,

which I believe is a substantial aspect and really the foundational aspect of the American dream. And so I think that continues to deteriorate, which I don't think leaves us with a better tomorrow in 20, 30 years. it may be better for landlords like myself over the next five to six years. So that's my primary concern. Gotcha. And that's a fair concern. We definitely don't want to have a country where the ladders that got us to our positions are falling.

Absolutely. We also have a pretty poor track record of getting more efficient and spending less money on things as a government and a society in general. And so I remain a little suspicious that if we remove this revenue line item, we're going to be able to draw out the rest of the revenue that states and local governments have. And so I think they're going to fall back on other things, which is taxing people through sales tax, increasing those DMV licensing fees, and a bunch of other kind of million cuts. Okay. All right. So I guess to wrap this up, let's say, you know, two situations. Ronda Sances in the Florida legislature succeed or they don't succeed.

What should you do as a rental property owner in either of those cases? Well, if I succeed, you mean actually get property taxes to zero. I'd try to buy there. I don't know if long term it's going to work. I'm not sure that I'd buy a primary there, but I think as an investor, if you can get in early or if you already own property in that area, I think it could be massively beneficial. And I hope to see the experiment play out, despite me being. suspicious as to whether or not it'll actually work.

Okay, last question. Ballpark guess. What percentage chance do you think it happens? And by it, I mean eliminating property taxes. What percentage chance do you think it happens in Florida? I definitely wouldn't flip a coin. So it's definitely not 50-50. I'm going to go with a 15% chance it happens

so that you have plenty of ammunition to throw it in my face. If six months from now, it's actually rolling out across the state of Florida. Perfect. Okay, I'll hold you to it. TurboTenant is the all-in-one platform for landlords to manage their rental properties. From vacancy to tenancy, we have you covered with industry-leading tools and expert advice. Landlord better from anywhere for free at turbotenant.com.