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The Florida Legislature passed
Committee Substitute for Senate Joint Resolution 532,
which lowers the current 10% assessment cap on commercial and
other non-residential property to 5%. The proposal requires a
change to the state constitution so it must also
be approved by voters before it becomes law.
Business groups and
research organizations, such as Florida Tax Watch, have
expressed concerns about a reduced assessment cap. The cap could
pressure local governments to increase millage rates – a side
effect that would raise taxes across the board. What’s more, the
cap is lifted when properties change hands so it puts an added
tax burden on new, expanding and relocating businesses.
The effect would be
similar to what has happened with the Save Our Homes cap on
residential properties. Homeowners, who have stayed in the same
house for many years pay much lower taxes than new owners.
Virtually identical
commercial buildings could experience these same tax
disparities. This would either help or hinder their competitive
advantage to attract and retain tenants since property taxes are
a pass-through expense.
The measure will
not go on the ballot until November 2010 so lawmakers could make
revisions to the proposal next year. One idea is to prevent
assessments from going back to full market value after a sale
unless the property is substantially changed. This might help
alleviate the effect of tax disparities among similar
properties, but it would not address the fears that a lower
assessment cap would lead to higher property taxes.
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