Overview

Florida’s proposal to eliminate property taxes sounds like a radical affordability solution — but what would it actually cost? In this episode, Maiclaire Bolton Smith and Chay Halbert unpack the financial, political, and social tradeoffs behind this bold move.

  • Eliminating property taxes would cut funding for schools and public services, forcing states to consider more inconsistent funding alternatives like sales tax hikes.
  • Florida’s affordability crisis is already pushing people out of major cities like Miami, and this proposal could deepen inequality.
  • Replacing lost revenue isn’t as simple as it sounds — and may create more complex issues than it solves.

A conversation with Chay Halbert

When Florida Governor Ron DeSantis floated the idea of eliminating property taxes, it didn’t just raise eyebrows — it raised questions. Could a state really afford to cut off one of its most reliable revenue streams? And what would happen if it did?

Property taxes aren’t just numbers on a bill — they fund schools, public services, and critical infrastructure. Lose them, and you lose more than revenue. At the same time, the proposal could a lifeline in an affordability crisis: Cut property taxes, and you could ease the financial burden on homeowners.

Affordability remains a paramount concern. In Florida, rising costs are pushing people out of places like Miami. Add in skyrocketing insurance costs and sales tax hikes — one possible substitute for property taxes — and these reforms risk hitting low-income families the hardest.

In this episode of Beyond the Buildings, host Maiclaire Bolton Smith sits down with Cotality public policy analyst Chay Halbert to examine the ripple effects of this proposal on Florida’s already stretched insurance market and aging public infrastructure.

In this episode:

2:37 – What is Florida’s proposal for eliminating property taxes?

4:38 – Florida has already removed several sources of revenue, so what will eliminating property taxes do to the state's budget?

6:48 – Are there any alternate sources of revenue?

9:23 – Why is Florida considering eliminating property taxes?

12:55 – Erika Stanley does the numbers in the housing market in The Sip

14:04 – How do property taxes limit affordability? Could this proposal improve affordability?

16:11 – Will this proposal pass, and is this the right answer for improving affordability?

How Gen Z will write new rules for homebuying

Transcript

Chay Halbert:

If you take a balloon and you squeeze it, it's going to go somewhere, and it's like the air inside's not going to disappear. And in the same way, you can't just eliminate this money from one place and expect it to magically reappear in another. So while you may save homeowners on their tax bill every year, there's going to be lots of different ways, lots of unintended consequences from this and lots of ways that we probably aren't even thinking about now, that we're going to see the effects of this.

Maiclaire Bolton Smith:

Welcome to Beyond the Buildings by Cotality. I am your host Maiclaire Bolton Smith, and I'm just as curious as you are about everything that happens in the property industry. On this podcast, we satisfy our collective curiosity, explore questions from every angle and look beyond the obvious. With every conversation, we illuminate what is possible. Florida is a state where policy decisions often enter the national discourse from its insurance market to its relationship with the White House. People pay attention when the state's government proposes an initiative. That's why when Governor DeSantis floated the idea of eliminating state property taxes, the response was audible across the us. Florida has long been an antidote to high tax, high cost states and people who are unable to crack housing markets elsewhere flocked to the Sunshine State. However, natural disasters, soaring insurance costs and the growing tension between business growth and housing affordability has put paradise under pressure. While doing away with property taxes could alleviate the state's affordability pressures. Such a decision may not prove to be a simple solution. So to talk about what eliminating property taxes could mean for the state's real estate market and how it could affect affordability, we have Chay Halbert, principle and public policy and industry relations here at Cotality. Chay, welcome to Beyond the Buildings

Chay Halbert:

Maiclaire, it's great to see you again.

Erika Stanley:

Before we get too far into this episode, here's a friendly reminder about how to see what's coming up next in the property market. To make it easy, we curate the latest insight and analysis for you online, find us using the handle at totality on all our social media channels. But now let's get back to Maiclaire and Chay.

Maiclaire Bolton Smith:

Okay, so this one, my brain is exploding, so I can't wait to talk to you about this. It's so interesting. But Florida, the governor has just proposed the idea of eliminating property taxes, but Florida's not the only state to ever do this. So why would a state like Florida choose to even consider doing this?

Chay Halbert:

Well, I think off the bat, affordability is really going to be the prime motivator here. I mean, we understand across the country, home prices, mortgage rates are still high. So when it comes to the levers that are portable by state government and taxes is certainly one of 'em. Another reason they're probably looking at is just to attract new residents. And beyond that, it's like Florida is kind of a different state than other places. It's like DeSantis is somebody who has a national profile. It's like the state itself has a national profile, and you can't ignore the political considerations. Here, Florida is a state that wants to see itself as part of a national political conversation, and I think this is one way that they can do that.

Maiclaire Bolton Smith:

They definitely have done that. Yeah, well, but Florida's not the only state to ever consider doing this. Other states have considered dropping property taxes in the past, haven't they?

Chay Halbert:

Yes. I mean, you look at other states who have eliminated their income taxes. Nevada, I know Texas, and Oregon. There you go. It's like they have other unique revenue streams that allow them to do that, but this is definitely going up another level or two because you think about the consistency of property tax. It's really a big swing.

Erika Stanley:

Along with Florida, Illinois, Kansas, and Pennsylvania are also proposing to eliminate property taxes entirely.

Maiclaire Bolton Smith:

Well, I'm glad you mentioned that because property taxes, I mean, they serve a purpose. They're one of the state's major revenue sources. And if we go back to 2006, they're also used to be taxes levied on things like stocks and bonds as well as one-time payments on mortgages. But policymakers repealed the tax on stocks and bonds and bank notes back in 2006. But that actually had a really major impact and it dropped revenue from nearly 1 billion annually to 174 million by 2010. So that's huge. So what would happen if the revenue were to drop dramatically by eliminating property taxes?

Chay Halbert:

Well, that is a really good question. I mean, like you said, it's like they've already been eliminating other sources of revenue. So the levers that they can pull the arrows and their quiver, it's like they're few and far between at this point. Maybe is there an appetite to look at stocks and bonds? Again, I don't know. I would doubt that. So that's one way that it's probably not going to be used to make back some of this money sales tax. That might be really the kind of last lever that they have to pull. Sure. But when it comes to increasing sales tax, the level, the amounts that you would have to erase it to get even close to what they're going to lose in property tax revenue, it's huge. And it's really hard to think about how that math works out.

It's also important to remember that you can't just turn that dial and just expect the money to start flowing. It's like people are really going to start making decisions and they're going to really start thinking hard about their purchases if sales tax increases substantially, and it's like we already hear every day about the price of eggs. We know that the Nintendo switch too is coming out and people are going to want that. The kids are going to want that, but there's going to be some really hard decision making and a lot of purchases that aren't going to happen if sales tax dramatically increases. It is not that elastic.

Maiclaire Bolton Smith:

Right. Not necessarily the best solution. So the other thing too is I'm not familiar as much with the one-time tax payments on mortgages. Can you talk a little bit about what that is and I guess how it would function potentially as a source of revenue?

Chay Halbert:

Yeah, it's pretty straightforward. It's like it's about $2 per thousand on a property value or the loan amount, whichever is lower. So it's not necessarily going to be on the value of the home. So something like down payment eats into that quite a bit. So if you've got, just making up some numbers here, but a $400,000 home and you put $200,000 down, well you're only going to collect the one time tax on the 200,000. That's a pretty limited scope. And if that's something where they want to try to collect some more there and bump that up a little bit more, I mean it'll help with the margins. But as it's currently constructed or even a future state where it's a lot more, again, it's just not going to fill that void that property tax does.

Maiclaire Bolton Smith:

And I mean the example you gave too was a hefty down payment. There are options for people doing 15, 10, even five and even less than 5% down payments. And if you were doing it on a smaller value, it would be even a smaller amount of tax collected.

Chay Halbert:

Right.

Maiclaire Bolton Smith:

So definitely not necessarily a viable solution that would make up for what you'd be losing in property taxes. I guess circling back on the sales tax again is, we talked a little bit about this, but would it actually affect real estate transactions if it were sales tax and we were taxing people on the Nintendo Switch and others?

Chay Halbert:

Probably not. I don't think in terms of real estate, it would really make a big difference. Real estate aren't subject to sales tax in Florida. The only exception to that is manufactured housing. So mobile homes, it's like those do incur, I believe a 3% when it's new and 6% if it's used

Maiclaire Bolton Smith:

Still not

Chay Halbert:

A lot. It's not a lot. And again, that's also one time that's not recurring as well. If it's a stick belt house, it's not something that's going to be subject to that.

Maiclaire Bolton Smith:

Yeah, yeah. I guess as I hear you talk about this, there really are limited ways of recouping the lost funds that you would get from eliminating property taxes. Why is this something that Governor DeSantis is even proposing?

Chay Halbert:

Again, I think that the Florida example, and it's like their place in national conversation, it does really play a lot into this, and I think it's something where they do want to be seen as innovators and they want to be seen being on the cutting edge. And I think sometimes that leads to ideas that are they going to work? It's a big question. Again, I think there's a good reason that this is just not something that you really hear outside of Florida and maybe a few other places, people talk about much and again, and that's talk that's not enactment,

Maiclaire Bolton Smith:

Right? Do you think it actually will impact and help affordability?

Chay Halbert:

I think that in the very short term and in some specific cases it can, right? I mean, you are talking about thousands of dollars a year that folks will not have to pay, but it's not, I think about if you take a balloon and you squeeze it, it's going to go somewhere and it's like the air inside's not going to disappear. And in the same way, you can't just eliminate this money from one place and expect it to magically reappear in another. So while you may save homeowners on their tax bill every year, there's going to be lots of different ways, lots of unintended consequences from this and lots of ways that we probably aren't even thinking about now that we're going to see the effects of this.

Maiclaire Bolton Smith:

And okay. That's actually where I want to go next is because my brain instantly goes to those tax dollars, serve a good purpose. They do things like pay for public services. So I guess I want to talk a little bit about, let's just think of schools. I mean, our property taxes pay for our public schools, so the school district. So if the average school building is now 31 years old in Florida, but the resources to rehabilitate the classrooms or scarce property taxes make up 50 or 60% of the school district's revenue, what would it do to the public school system if we didn't have these resources anymore? And ultimately for the state's real estate market?

Chay Halbert:

Well, I think you may start to see some, maybe for a lack of a better term, some vicious cycles where the school districts that are doing well, the newer schools, the schools that are good schools, you're going to see those real estate markets really heat up. Those are going to be the places that people want to move to and get their kids enrolled in those schools. And the inverse of that, the schools that are bad schools or the older schools. You're going to see them get worse as folks start to move away from those neighborhoods. And so already dwindling tax revenues or revenues of whatever kind that they may come up with, those are going to start to dry up even more and the haves will have more and the have nots will have less.

Erika Stanley:

It is that time again, totality just dropped new numbers about what's happening in the housing market. Here's what you need to know. Florida home prices are outpacing the national average, but Miami is topping the charts at 60% above Florida's average price. As a result, 500,000 people left Miami between 2019 and 2023. They headed to other areas of the state like Tampa, Jacksonville in Orlando to compound these soaring prices. The state's insurance market is on shaky ground with insurance costs out of sight compared to even a few years ago. Many Floridians are skipping coverage altogether. That choice is a risky one though, since many areas in Florida are projected to become some of the riskiest in the nation for natural hazards according to totality analysis, there are also indications that Floridians are leaving the state. Almost half of outbound Floridians are headed to Georgia, the Carolinas, Tennessee, and Texas. To find out more about the pressures affecting Paradise, visit totality.com/insights. There's also a link in the show notes, and that's the sip. See you next time.

Maiclaire Bolton Smith:

Yeah. Yeah. And that definitely is a major concern here. But I guess too, if we look at both sides of the coin, the property tax system is not perfect. There are issues with it as well, and they do contribute to affordability issues as well because people need, as you mentioned, several thousands of dollars, tens of thousands of dollars in some cases every year, which is getting harder and harder for some people to afford.

Chay Halbert:

Yes. I mean certainly it is a cost, right? It is a cost for anybody that owns a home, but it's important to remember that property tax, it's a function of the home's value. So the more the home is worth, the more you pay and the less your home is worth, the less you pay. And if you're thinking about moving that revenue into other places, other taxes don't work the same way. Again, sales tax is a good example of that when you think about the fact that for lower income folks, they pay a higher percentage of their income on food as opposed to higher income families. That's one way that if you're really increasing sales taxes, that you're going to be putting more of a burden on folks that make less money. So yes, it's like affordability is obviously not in a good place right now, and it is certainly laudable to be thinking about what are the levers that you can pull to make affordability better. You also have to think about all of the second order effects and again, where you make that money because it's something that it just doesn't fix itself on its own.

Erika Stanley:

It doesn't. Yeah. If you haven't had a chance to meet Cotality yet, come say hi. We help you see property from every angle by analyzing the nuances behind billions of data points across the globe. A link to learn more is in the show notes.

Maiclaire Bolton Smith:

That's actually kind of where I want to end today. And I have a two-part crystal ball question for you, Chay. So bear with me here. The first one I would have to say is if you were to look into your crystal ball, what opportunities are there out there to help address affordability pressures in Florida and is eliminating property taxes actually the right answer?

Chay Halbert:

Well, I would say that Florida has been doing pretty good at really addressing supply. And it's like they have been one of the leaders in bringing new homes online, bringing new stock online. And at the end of the day, that is really the thing that's going to move the needle. It is a pretty simple supply and demand problem and bringing more supply on, bringing more homes, getting those built, that's what's going to move the needle on affordability. And Florida has been doing a pretty good job of that. So that's something that just me personally, I would certainly encourage them to keep doing, keep building more homes. Now it's important to do that smartly and to think about Hazard and all these other things, but supply, supply, supply, supply, I'll always beat that drum.

Maiclaire Bolton Smith:

Yeah, and not unique to Florida. That's really the drum that's beating across the entire country. Exactly. We have a supply issue. Okay. Part two of my crystal ball and get that crystal ball and shine it up here, Chay, because if you were to look in your crystal ball, do you actually think that this is going to happen? Do you think they are actually going to eliminate property taxes in Florida?

Chay Halbert:

My gut says no. It is just too much money. It is tens of billions of dollars. And not only that, it's a regular supply of money. It's consistent. It's something that municipalities can count on year in and year out. So eliminating that much money, that's that consistent, I just can't imagine, again, the math is just so hard to see working out on that. So my guess is that I know that DeSantis is pushing hard right now to get a thousand dollars homeowner tax rebate. And I think if that's something that he gets through his legislature and they're able to pass that on to homeowners, I think that's probably a pretty good win for him. And while reducing everybody, every homeowner's tax bill by a thousand dollars, again, that still raises the question of where you get that money,

Maiclaire Bolton Smith:

Where you're going to make it up.

Chay Halbert:

Yeah, exactly. It's not eliminating. And so I would imagine that if they get that, they'd probably be pretty happy. And DeSantis can claim a win there. And at that point, I'm not sure that it's like going the full measure of eliminating it. Again, it's just hard to see how that makes sense.

Maiclaire Bolton Smith:

It's unfathomable to even comprehend really. So well Chay, we will be watching and as the story unfolds, if something dramatic does happen, we'll have to bring you back and talk about what the impact of it means. So thank you so much for joining me today on Beyond the Buildings by Totality.

Chay Halbert:

Of course. My pleasure. Thank you.

Maiclaire Bolton Smith:

All right. And thank you for listening. I hope you've enjoyed our latest episode. Please remember to leave us a review and let us know your thoughts and subscribe wherever you get your podcast to be notified when new episodes are released. And thanks to the team for helping bring this podcast to life producer Jessi Devenyns, editor and sound engineer, Romie Aromin, our facts guru, Erika Stanley and social media duo, Sarah Buck and Makaila Brooks. Tune in next time for another conversation to illuminate the ideas that will define the future.

Erika Stanley:

You still there? Well, thanks for sticking around. Are you curious to know a little bit more about our guest today? Chay Halbert holds the position of Principal Public Policy and Industry Relations at Cotality. He develops and manages relationship building efforts between the company and policymakers at the local, state and federal level.