Florida Homestead Exemption - What if Property Value Decreases?

[Chris Suttman]

Having a Florida Homestead Exemption limits your property value for tax purposes to +3% of previous year value. What if the property value decreases? For example... You buy a primary residence for $300k. The housing market crashes and the value decreases to $200k. Then the next year the value goes up again to $300k (exaggerated, obviously). Is your current tax based on a property value of $206k (previous year was $200k plus 3% allowed increase)?