The 10 Percent Cap: How Florida Limits Property Tax Increases on Rentals and Second Homes

Three TRIM Notices, Three Surprises

Carla owns three rental properties in Ormond Beach. She is 48, methodical about her finances, and not easily rattled. But when the TRIM notices arrived in August, she called with a simple question: the duplex next door to one of her rentals sold for well above asking price, and now her property appraiser is showing a sharp jump in assessed value on all three of her units. Is there any limit on how fast a non-homestead assessment can climb?

The answer is yes, and understanding it changes how Carla reads every line of those notices. Carla is a composite, not a client, but her situation is common enough in Volusia County that the details are worth walking through carefully.

The Legal Foundation: Two Caps, Two Tracks

Florida runs two assessment limitation systems side by side. Homestead property falls under Save Our Homes, which caps annual assessment increases at three percent or the change in the Consumer Price Index, whichever is lower. Rental homes, investment condos, vacation properties, vacant residential land, and most commercial buildings follow a separate track governed by Florida Statutes sections 193.1554 and 193.1555. That second track is the ten percent non-homestead assessment cap.

Voters approved the cap through Constitutional Amendment 1 on January 29, 2008. The base year was 2008, capped assessments began in 2009, and the provision was renewed by more than sixty percent of Florida voters in November 2018. It does not expire at a fixed date as the original version once threatened to do.

Section 193.1554 applies to nonhomesteaded residential property containing nine or fewer dwelling units, including vacant land zoned and platted for residential use. The Department of Revenue use codes covered include single-family homes, mobile homes, condominiums, cooperatives, and multi-family properties with fewer than ten units. Section 193.1555 extends a parallel cap to certain other residential and nonresidential real property.

No application is required. The cap applies automatically once the property qualifies.

What the Cap Actually Does, and Does Not Do

Each January 1, the county property appraiser estimates market value for every parcel. Under the non-homestead cap, the assessed value used to calculate most taxes may not rise more than ten percent above the prior year's assessed value, regardless of how fast the market moved. If comparable sales pushed market value up twenty-five percent, the assessed value for capped levies rises only ten percent.

That distinction matters, but it comes with two important limits that Carla's notices illustrate clearly.

First, the cap protects assessed value, not the actual tax bill. Millage rates are set by the county commission, city council, and various taxing authorities every year. If the millage rate rises, the tax bill rises even if the assessed value stayed flat. Special assessments, fire district fees, and stormwater charges are added on top and are unaffected by the cap entirely.

Second, and more significant for Carla, school district levies are carved out completely. School taxes, which are often the largest single line on a Florida tax bill, are levied on full market value every year. The ten percent cap does not apply to them. So on one of Carla's rentals, the county and city portions of the bill are protected while the school board line tracks the appraiser's full market estimate without any ceiling. That combination explains why a modest-looking assessed value increase can still produce a noticeably higher total bill.

The Reset: What Happens When a Property Sells

This is the part of the cap that most directly affects sellers, and it is the part that can catch buyers off guard if they are not watching for it.

When a non-homestead property changes ownership or undergoes a qualifying change of control, the cap resets. The new assessed value for the following tax year is recalculated to market value as of January 1 following the sale. Any accumulated benefit from years of capped assessments sitting below market value disappears. The buyer starts fresh, and the assessed value jumps to whatever the appraiser determines full market value to be.

This reset dynamic has real pricing implications. A rental property in Ormond Beach, where the Zillow Home Value Index put the typical home value at $367,000 in July 2026, may have an assessed value that has been held below market for several years by the cap. A buyer who does not account for the assessment reset may underestimate carrying costs significantly in year one of ownership.

Significant improvements or additions to a property can also trigger a partial reassessment of the improved portion, separate from the cap mechanics on the underlying land and original structure.

How the Non-Homestead Cap Differs from Save Our Homes

The difference between the two systems matters both for long-term investors and for sellers thinking about pricing strategy.

Save Our Homes limits homestead assessment increases to three percent or CPI, whichever is lower, and it also comes with the portability benefit, which allows a seller to transfer up to $500,000 of accumulated Save Our Homes benefit to a new Florida homestead within the statutory window. The non-homestead cap offers no portability. It simply evaporates at the moment of sale.

The non-homestead cap also runs at ten percent rather than three percent or CPI. In a market where values are rising quickly, that is meaningful protection for a long-term investor, but it is substantially weaker than what a homestead owner enjoys. In Daytona Beach, where the Zillow Home Value Index put the typical home value at $253,000 in July 2026, a run of strong appreciation years could still leave a rental investor's assessed value trailing market value by a comfortable margin, even with the less protective cap.

Carla's Three Notices Explained

Carla's three TRIM notices each told a slightly different story, which is exactly what you would expect from three properties at different stages of their assessment history.

Her oldest rental, held for more than a decade, had accumulated the most separation between assessed value and market value. The appraiser's new market value estimate climbed sharply after a neighboring sale, but the capped assessed value for county and city purposes rose by the maximum allowable ten percent and stopped. The school board line, however, moved to full market value, and that single line accounted for the majority of her bill increase.

Her second property had been purchased more recently, so the assessed value was already close to market value. The cap provided less protection because there was less gap for it to bridge. Her bill increase was more uniform across all levying authorities.

Her third unit had received a permitted addition two years prior. The improvement triggered a partial reassessment of that portion, which added to the base before the cap was applied going forward. Her notice showed both the improvement value and the capped increase on the original structure as separate lines.

In all three cases, the TRIM notice included the deadline to file a Value Adjustment Board petition, which is twenty-five days from the date the notices are mailed. Missing that window closes the administrative appeal option for the year.

What This Meant for Carla

The ten percent cap did not eliminate Carla's tax increases, but it meaningfully limited how fast the county and city portions of each bill could grow relative to the market. Without it, all three assessments would have tracked full market value immediately, producing substantially higher bills in a year when comparable sales in her neighborhoods moved sharply upward.

What the cap could not protect was the school levy portion, and that is the line that surprised her most. Understanding that distinction, and building it into her rental pricing and cash flow modeling going forward, is the practical takeaway from her three notices.

Sellers with non-homestead property should also recognize that the cap benefit they have accumulated over years of ownership does not transfer. A buyer will inherit a fresh market-value assessment, and that affects how competitive a listing price needs to be relative to the buyer's projected carrying costs. If you are selling a rental in Ormond Beach, Port Orange, Palm Coast, DeLand, or anywhere else in Volusia County, understanding your current assessed value versus market value, and what a buyer's first-year tax bill will look like after the reset, is a legitimate part of the pricing conversation.

A CPA or qualified tax professional should run the actual numbers for any investor making decisions based on assessed value, depreciation, or post-sale tax exposure. As an attorney-REALTOR®, I can help you read the assessment, understand where the cap applies, and think through how the reset affects your listing strategy, but the final tax analysis belongs with your accountant.

For more on the costs and mechanics of selling Florida property, you can review how real estate commissions work in Florida after the NAR settlement for current guidance on what sellers actually pay at the closing table.

Ready to Talk Through Your Rental's Numbers?

Arthur Simpson, Esq., CIPS, is an Attorney and REALTOR® with Realty Pros Assured in Ormond Beach. He works with rental property owners across Volusia County, from Daytona Beach to New Smyrna Beach to Palm Coast, on listings that require both legal clarity and local market expertise. Visit arthursimpson.com or reach out directly to schedule a conversation about your property.