Legislative Tax Package Includes Ad Valorem Provisions Impacting Affordable Housing

Throughout the 2025 Session, the Florida Legislature addressed affordable housing and enacted much needed clarifications to the Live Local Act. Senate Bill 1730 primarily focused on addressing land use changes, whereas the recently passed HB 7031 – i.e. the Legislative Tax Package, detailed below, contains several provisions that affect tax policy relating to affordable housing and the Live Local Act. Both SB 1730 and HB 7031 address implementation challenges that have emerged since the initial passage of the Live Local Act in 2023 and the amended version in 2024.

On May 1, 2025, the Florida Legislature passed SB 1730. It was signed by the Governor on June 23 and will take effect on July 1, 2025. We outlined the major changes in the legislation in a comprehensive news alert here. In addition to the passage of SB 1730 and HB 7031, other legislation approved by both chambers affected funding for Live Local projects, including the General Appropriations Act that appropriated $150 million in nonrecurring funding for the Live Local State Apartment Incentive Loan (SAIL) program.

On June 16, 2025, the Florida Legislature passed the Legislative Tax Package, which the Governor is expected to sign into law once received. Every year, the House Ways and Means Committee originates the initial version of the Florida Legislature’s Tax Package. The Tax Package generally contains numerous provisions affecting tax policy ranging from statewide impacts to impacts on the local level, such as sales tax holidays, corporate taxes, property tax exemptions, and more. The provisions of the Tax Package discussed below are effective July 1, 2025 and can be utilized beginning with the 2026 property tax roll. The Tax Package contains the following specific provisions affecting the Live Local Act and other Affordable Housing provisions:

I. Missing Middle Tax Abatement – Subsequent Owners – Lines 479 – 486

During the 2024 Legislative Session, a new provision was added to the Live Local Act that allowed taxing authorities to opt out of the ad valorem exemption for projects qualifying as a Missing Middle project. However, the new provision contained a grandfathering provision for the property owners of qualifying projects located in counties that enacted the opt-out. We outlined the new provision in a news alert here. Because of the language used in the grandfathering provision tying the entitlement to the property owner, there was uncertainty as to whether subsequent or successor owners would still qualify if a tax authority opted out. HB 7031 seeks to clarify that uncertainty by tying the entitlement for the tax abatement to the qualifying project, as opposed to the property owner, and specifies that a “property in a multifamily project that received an exemption” may continue to receive the exemption, and the “same owner or each successive owner” can apply for such exemption.

II. Expansion of Local Housing Finance Authorities Role in Affordable Housing Projects

A. Expanding Ad Valorem Exemption to Project Leasing Land from Local Housing Finance Authorities – Lines 524 – 549

Currently, § 196.1978(1)(b) requires that projects qualifying for the ad valorem taxation must be leased from land owned entirely by a nonprofit entity. HB 7031 expands this qualification to projects on land leased from local housing finance authorities created under Part IV of Chapter 159. Additionally, the provision specifies that when leased-land is subsequently assigned or subleased to persons meeting the extremely-low-income, very-low-income, low-income, or moderate-income limits specified in § 420.0004, the exemption from ad valorem taxation is still effective.

B. Expanding Funding Opportunities for Local Housing Finance Authorities – Lines 501 – 513

Currently, in order to qualify as an affordable housing project under § 196.1978(4) that receives funding from the Florida Housing Finance Corporation (FHFC), the project must be subject to a land use restriction agreement (LURA) with the FHFC. HB 7031 would allow projects obtaining funding from a local housing finance authority created under Part IV of Chapter 159 to now qualify for the ad valorem exemption as long as the project is also subject to a 99-year LURA with the authority.

III. Affordable Housing Exemption on Land Owned by the State of Florida – Lines 553 – 600

HB 7031 creates § 196.19781, which would expand the exemption from ad valorem taxation to projects that provide more than 70 units of affordable housing on land owned by the State of Florida. To qualify under this new expansion:

• the property must provide more than 70 units of affordable housing to persons meeting the extremely-low-income, very-low-income, low-income, or moderate-income limits specified in § 420.0004;
• the land must be owned by the State of Florida;
• the property must be subject to a lease or restrictive use agreement for a minimum of 60 years; and
• the owner or operator of the property must apply annually for the exemption.

The exemption would first apply to the 2026 tax roll.

IV. Affordable Housing Exemption for Newly Constructed Projects on Land Owned by Governmental Entities – Lines 601 – 671

HB 7031 creates § 196.19782, which would expand the ability for newly constructed projects that provide more than 70 units of affordable housing on land owned by governmental entities to be exempt from ad valorem taxation. Governmental entities broadly includes any state government body or agency, any political subdivision, and includes lands owned by the federal government. To qualify under this new expansion:

• the project must provide affordable housing to natural persons or families meeting the extremely-low-income, very-low-income, low-income, or moderate-income limits specified in § 420.0004;
• the land must be owned by a governmental entity;
• the project must meet the definition of “newly constructed”;
• the property must be subject to a lease or restrictive use agreement for a minimum of 30 years; and
• the owner or operator of the property must apply annually for the exemption.

The exemption would first apply to the 2026 tax roll.

After passing both chambers, the Legislative Tax Package is heading to the Governor’s desk for his signature. Due to the statewide impact of this legislation, specifically relating to creation of new exemptions, our Government Affairs and Affordable Housing Practice Groups will be monitoring how the FHFC and local governments are implementing these new provisions.