Skip to main content
Commercial Real Estate
Business Observer Friday, Jun. 8, 2018 10 months ago

Commercial landlords could face big tax hike

Share
Voters will decide fate of commercial cap during November election
by: Kevin McQuaid Commercial Real Estate Editor

Commercial real estate owners in Florida could collectively face a tax increase of several hundred million dollars unless a cap on non-homesteaded property is extended beginning next year.

Initially enacted in 2008 as part of a law that allowed for portability of Save Our Homes legislation and granted additional exemptions for homesteaded property, tax hikes on commercial and rental property and land was capped at 10% — but only for a decade. The provision in the law is scheduled for repeal on Jan. 1 or next year.

Now, Florida Tax Watch is cautioning that property taxes on commercial and rental property could go up a combined $700 million unless voters in November agree to extend the cap permanently. The amendment will require at least 60% of voters to agree to the extension by voting “yes” on Amendment 2, the group notes, to preserve what it calls an “important protection.”

In a new report, Florida Tax Watch warns that any tax hikes to commercial or rental property likely would be passed on to renters or tenants, which already pay more than 43% of all taxes in the form of property taxes.

As an example of the disparity that has grown in commercial property taxation vs. homesteaded property taxation, the group notes that a homesteaded property assessed at $200,000 in 2000 would pay roughly $4,200 in taxes.

By 2007, thanks to the state’s Save Our Homes’ provision that limits annual assessments to 3% or inflation, whichever is less, that same property would have been assessed at $237,483, but its property tax bill would have dropped by 3% to $4,075.

By comparison, a non-homesteaded commercial property assessed in 2000 at the same amount would have experienced a doubling — to $4353,888 — in its assessment over the same period, resulting in an 85.4% increase in its annual tax bill, to $7.789 by 2007.

Florida Tax Watch also notes that when total property taxes rose 113% statewide from 2000 to 2007, from $14.3 billion to $30.4 billion, the hike was borne “almost entirely” by non-homesteaded properties.

“Florida has an inequitable property tax system that disproportionately burdens renters, businesses and other non-homestead property owners,” Florida Tax Watch concludes.

“As long as property values rise, those inequities will continue to grow.”

 

Related Stories

Advertisement