Primary vs. Second Home Costs in the Florida Keys: Property Taxes, Insurance, and Ownership Differences Explained

Primary vs. Second Home Costs in the Florida Keys

Owning a home in the Florida Keys involves specific financial differences depending on whether the property is classified as a primary residence or a second home. Being that we live in paradise, majority of our homes are Vacation or second homes. While this is not a positive or negative thing, some expenses looking a little different for those who call the Florida Keys home and for those who visit a couple months out of the year. The following outlines key cost factors including property taxes, insurance, and other ownership expenses that differ between Primary Residence and Secondary Homes.

1. Property Taxes and the Florida Homestead Exemption

Homestead Exemption

• Florida homeowners who use their property as a primary residence can apply for the Homestead Exemption, which reduces the taxable value of the property by up to $50,000.
• This exemption also qualifies the owner for the Save Our Homes (SOH) assessment cap, which limits the annual increase in assessed value to 3% or the Consumer Price Index (CPI), whichever is lower.
• These benefits are only available to properties classified as the owner’s permanent residence under Florida Statute §196.031.

Second Homes and Non-Homesteaded Properties

• Properties not occupied as a permanent residence—such as vacation or investment homes—do not qualify for the Homestead Exemption or the SOH cap.
• Non-homesteaded properties are assessed annually at market value, and their taxable value can increase by up to 10% per year under Florida’s non-homestead assessment cap.

Impact

• The effective property tax rate in Monroe County generally ranges from 0.8%–1.0% of assessed value.
• The difference in taxation between homesteaded and non-homesteaded properties results from the exemption and assessment cap, not the millage rate itself.

2. Insurance Costs

Insurance rates in the Florida Keys are influenced by several factors, including property location, elevation, age, construction type, and occupancy status.

Primary Residence Policies

• Insurers typically categorize primary homes as owner-occupied, which may qualify for lower premiums because the home is maintained year-round.
• Policies usually include wind, flood, and homeowners’ coverage, all required by most mortgage lenders in coastal areas.

Second Home Policies

• Second homes are classified as non-primary or secondary residences, often subject to higher premiums due to increased risk exposure and vacancy periods.
• Across Florida, secondary home insurance averages 38.8% higher than comparable owner-occupied homes (Policygenius, 2024).
• The average annual homeowners insurance premium in Monroe County range $9,000–$10,000, depending on structure type, location, and insurer underwriting.

3. Maintenance and Upkeep

Utilities and Services

• Even when not occupied, homes require ongoing utility service for electricity, water, air conditioning, and humidity control to prevent mold and corrosion.
• Common monthly services include pest control, landscaping, and pool maintenance.

Hurricane Preparedness

• Homes in the Keys must comply with hurricane mitigation standards, including window protection, roofing requirements, and flood-zone compliance.
• Non-resident owners often contract local property managers or maintenance services for storm preparation and post-storm inspections, which could add to annual expenses.

4. Short-Term Rental and Occupancy Regulations

Local Regulations

• Monroe County and incorporated municipalities, including Key West, Islamorada, Marathon, and Key Colony Beach, regulate short-term rentals.
• Permitting and zoning restrictions vary by jurisdiction; some areas require vacation rental licenses, while others limit minimum stay durations. To read more about rules and regulations on Vacation rentals in the Florida Keys check out my blog The Florida Keys AirBnb Market Explained

Insurance Implications

• Properties used for rental purposes require additional liability and rental-use coverage.

5. Summary of Key Cost Differences

6. References and To Read More

• Florida Department of Revenue: Homestead Exemption Overview
• Monroe County Property Appraiser: Tax Rate and Assessment Information