Keep Your Miami-Dade House as a Rental When You Move Up?

Should you rent out your Miami-Dade house instead of selling it when you buy the next one?

Only if the numbers survive three changes that hit the day you move out. Renting your homesteaded house ends the Save Our Homes cap — your assessed value resets to full market value the following January 1, and the exemption goes away with it. You also start a roughly three-year clock on the federal capital gains exclusion, and under a Fannie Mae rule change that becomes mandatory on November 1, 2026, your lender can no longer use a signed lease to count that rent toward the new mortgage. Run all three before you call a property manager.

By Pedro Casanova | September 14, 2026

It's the most tempting idea in a move-up purchase. You've owned your Kendall or Palmetto Bay house since before the run-up, the mortgage is at a rate nobody's getting today, and houses in Miami-Dade rent for real money. Why hand all of that to a buyer when you could keep it and collect rent?

Sometimes that's exactly right. But the version of this plan most people run in their head assumes today's tax bill, today's insurance premium, and a lender who'll count the rent. All three of those assumptions change on the day you stop living there — and two of them changed again this year.

Here's what I walk clients through before anyone signs a lease.

Your property tax bill resets, and the reset is bigger than the exemption

Most people think losing the homestead exemption means losing about $700 a year. That part is true and it's the small part.

For 2026, the Miami-Dade homestead exemption is $51,411 — $25,000 that applies to all taxes including school district levies, and $26,411 that applies to non-school taxes only. What that's worth depends on where you are, because total millage varies a lot across this county: roughly 16.9 mills in unincorporated Kendall, 17.6 in Pinecrest, 17.7 in Palmetto Bay, 18.2 in Coral Gables, and close to 20 in the City of Miami. Call the exemption worth somewhere around $700 a year. Annoying, not decisive.

The decisive part is the Save Our Homes cap.

Under Florida Statute 196.061, renting all or substantially all of your homestead is an abandonment of the homestead. The abandonment continues until you physically occupy the dwelling again. There's a narrow grace provision — abandonment after January 1 doesn't cost you the exemption for that particular year unless the property is rented for more than 30 days per calendar year for two consecutive years — but that's a short runway, not a workaround.

Once homestead is gone, the Miami-Dade Property Appraiser puts the property under the non-homestead cap instead. And the Property Appraiser is explicit about what that means: when a property changes use from homestead, the non-homestead limitation begins the following January 1, and the market and assessed values are equal in the first year.

That's the whole ballgame. Every dollar of accumulated Save Our Homes benefit disappears in one step.

Say you bought in 2016, the house is worth $750,000 today, and your capped assessed value sits at $480,000. Rent it out and the following January 1 your assessed value is $750,000 — roughly $270,000 in newly taxable value. In unincorporated Kendall that's about $4,560 a year in additional tax; inside the City of Miami the same swing runs closer to $5,400. And that's before you count the lost exemption. Your numbers will differ, but the shape of it won't.

From there the non-homestead cap limits annual assessment increases to 10%, and that cap excludes School Board millage.

Amendment 3, on the November 3, 2026 ballot, would move this math in both directions. It lowers the non-homestead cap from 10% to 5%, which helps you as a landlord. But it also raises the homestead exemption for all non-school taxes to $150,000 in 2027 and $250,000 in 2028. If it passes — it needs 60% approval — then the homestead you'd be walking away from stops being worth about $700 a year and becomes worth roughly $2,000 in 2027 and around $3,000 in 2028.

Neither change undoes the reset itself. But the second one makes this decision meaningfully more expensive, and the vote lands before most people would finish a move. If you're close to the line, it's worth knowing the result first.

One more thing, because people ask: don't plan on the Property Appraiser not noticing. Under F.S. 196.161, if the office determines you received a homestead exemption you weren't entitled to in any of the prior 10 years, the property becomes liable for the exempted taxes plus a 50% penalty for each year and 15% interest per annum. The office runs a homestead fraud reporting portal. This is not a risk worth carrying into a rental.

The portability piece most people get backwards

Here's the good news, and it's genuinely useful: you do not have to sell the old house to take your Save Our Homes benefit with you.

Portability requires abandonment, not a sale. Florida Statute 193.155(8) ties eligibility to having held a homestead exemption in one of the three preceding years, and the Department of Revenue's own guidance puts it plainly: you must establish homestead on the new home within three years of January 1 of the year you abandoned the old homestead — not three years after the sale. You file Form DR-501T with your DR-501 homestead application, and the deadline is March 1.

So the SOH benefit you built up on the Kendall house can follow you to the new one even if you keep the Kendall house and rent it. That's a real and frequently missed advantage of the keep-it strategy. Just don't miss the filing window, because there are no refunds for the years you skip.

Your lender's rules changed on September 2, 2026

This is the part where the advice you'll find online is now wrong.

For years the standard playbook was: get a signed lease on your departing house before you apply for the new mortgage, and the lender will count the rent. Fannie Mae retired that playbook in Selling Guide Announcement SEL-2026-08, issued September 2, 2026. Lenders may implement immediately and must do so for all loans with application dates on or after November 1, 2026.

The new topic is B3-3.8-05, Rental Income from Non-Subject Property: Departing Residence, and it says this directly: lease agreements are not permitted for any departing residence. Full stop.

Instead, your lender documents market rent using one of these:

• A complete appraisal report that includes market rents
  
  
• A Single-Family Comparable Rent Schedule (Form 1007) for the occupied unit
  
  
• Market analysis tools — Zillow, Redfin, MLS — with at least three comparable rental properties, from the same market area where possible
  
  

Then the math runs on a formula, not on your lease:

1. Multiply monthly gross market rent by 75% — the other 25% is assumed away for vacancy and maintenance
   
   
2. Subtract the full PITIA on the departing house
   
   
3. If the result is positive, it may be used to offset the departing residence PITIA only — it does not get added to your income
   
   
4. If the result is negative, that shortfall goes straight into your debt-to-income ratio
   
   

And the requirement that surprises people most: if you have less than 12 months of property management experience, your lender must verify you hold six months of reserves covering the PITIA on the vacated property — on top of any reserves required for multiple financed properties.

For a first-time landlord carrying a $4,000 PITIA on the old house, that's $24,000 sitting in liquid accounts that can't also be your down payment. This is the single most common reason a keep-it plan dies at underwriting, and it's better to find out now than three weeks before closing. If the reserve requirement is what's blocking you, selling first or buying first becomes the more useful question.

Separately: check your existing mortgage. Most primary-residence loans carry occupancy covenants, and converting to a rental without telling your servicer is not a gray area.

The three-year capital gains clock

Under IRC Section 121, you can exclude up to $250,000 of gain ($500,000 filing jointly) if you owned and used the home as your principal residence for an aggregate of two years out of the five years ending on the sale date.

Move out and rent, and that five-year window keeps sliding. The clock starts the day you stop living there — not the day a tenant moves in — so you have roughly three years from your move-out date, not from the lease start. Past that, the full exclusion is gone, though a reduced one may still be available if the move was driven by work, health, or another unforeseen circumstance. That's a CPA conversation, not a blog conversation.

For a Miami-Dade owner sitting on $400,000 of appreciation since 2016, none of this is a rounding error.

Two more federal wrinkles the IRS spells out:

• You cannot exclude the portion of gain equal to depreciation allowed or allowable after May 6, 1997. If you don't claim depreciation, you still have to reduce your basis by what you could have claimed. That gain is taxed at the 25% unrecaptured Section 1250 rate.
  
  
• Taxable gain may also be subject to the 3.8% Net Investment Income Tax.
  
  

Florida has no state income tax, which is why this catches people here. The federal bill is the whole bill, and it's real.

So does it ever work?

Before you answer that, there's one more cost that changes.

You can't just keep the same insurance policy

Your HO-3 homeowners policy covers a home you live in. Put a tenant in it and you need a landlord dwelling policy — typically a DP-3, which adds loss-of-rents and landlord liability coverage.

Leaving the HO-3 in place is not a shortcut. It's a material misrepresentation, and carriers investigate occupancy at claim time. Expect a landlord policy to run meaningfully more than the homeowners policy it replaces, and in Miami-Dade, where premiums already reflect wind and flood exposure, landlord coverage commonly lands in the thousands per year depending on value, roof age, and location. Get a real quote before you build a rent projection around a guess — the same discipline that applies to the full carrying-cost picture on any Miami-Dade property.

The verdict

Yes, it works — regularly. Houses rent well here, with single-family asking rents across the Miami area running in the low-to-mid $3,000s through 2026, though the spread between submarkets is wide enough that only a real comp pull tells you your number. And the sale side stayed firm: single-family inventory held at roughly 4.8 months' supply in the most recent county report, with the median single-family price at $685,000 in July.

The keep-it plan tends to work when you have a genuinely below-market rate, enough liquid reserves to clear the six-month test without touching your down payment, a market rent that covers the post-reset PITIA rather than today's, and either a plan to sell inside the three-year window or a long enough horizon that the capital gains exclusion was never the point.

It tends to fail when the rent only works on the old tax bill.

That's the calculation worth doing on paper before you make it emotionally. If you already own a rental and you're weighing the other side of this question, whether to sell a Miami-Dade rental in 2026 covers that ground.

Frequently Asked Questions

Can I rent out my Miami-Dade house for a few months and keep my homestead exemption?

Possibly, but the margin is thin. Under F.S. 196.061, abandonment after January 1 doesn't affect that year's exemption unless the property is rented for more than 30 days per calendar year for two consecutive years. Renting long-term to a tenant while you live somewhere else is abandonment, and the Miami-Dade Property Appraiser audits for it.

Do I lose Save Our Homes portability if I keep the old house instead of selling it?

No. Portability requires abandoning the prior homestead, not selling it. You must establish homestead on the new property within three years of January 1 of the year you abandoned the old one, and file Form DR-501T along with your DR-501 by March 1.

Will my lender count the rent from my old house toward the new mortgage?

Partially, and the rules just changed. Under Fannie Mae's B3-3.8-05, effective for applications on or after November 1, 2026, lease agreements are not permitted for a departing residence. Your lender uses documented market rent, multiplies it by 75%, subtracts the old PITIA, and may apply a positive result only to offset that old payment — never as added income.

How much do I need in reserves to keep my current house and buy another?

If you have less than 12 months of property management experience, Fannie Mae requires six months of reserves covering the departing property's full PITIA, in addition to any reserves required for multiple financed properties. On a $4,000 monthly payment that's $24,000 that cannot double as your down payment.

What happens to my capital gains exclusion if I rent it out and sell later?

You have roughly three years from the date you move out. The Section 121 exclusion requires two years of personal use within the five years ending on the sale date, so once more than three years have passed the full exclusion is gone — though a reduced exclusion may still apply if the move was for work, health, or another unforeseen circumstance. Depreciation taken or allowable after May 6, 1997 is separately excluded and taxed at up to 25%.

Keeping your house and renting it out can be a smart way to build long-term wealth in this market — but only if you price it against the tax bill, insurance premium, and lending rules that apply after you move out, not the ones that apply today.

If you want to run these numbers against your actual house and your actual equity, I offer a free buying or selling strategy session — no pressure, just a straight conversation about what each path actually nets you. You can grab a time here.

About Pedro Casanova

Pedro Casanova is a real estate broker that leads The KREN Group real estate team serving the Southeast Florida area. They specialize in helping people build wealth through real estate by helping buyers and sellers maximize their opportunity in every transaction. Connect with the team at www.thekrengroup.com.

The KREN Group | Keller Williams Premier Properties

This article is general information, not tax or legal advice. Property tax treatment, mortgage qualification, and capital gains outcomes depend on your specific facts — confirm yours with the Miami-Dade Property Appraiser, your lender, and a CPA or attorney.