SB 33 Direct Impacts on Commercial Property

As you may know, Senate Bill 33 (SB 33), as passed, primarily targets homestead (residential) property tax relief, which has several direct and indirect consequences for commercial property owners.

• Excluded from Assessment Caps: Unlike owner-occupied homes, commercial properties are not eligible for the new mandatory assessment caps. While taxable home values are capped at a 3% annual increase (or the rate of inflation), the taxable value of properties like apartments, factories, offices, and retail stores will continue to be assessed at full market value.

• Potential Tax Burden Shift: Because local governments (cities, counties, and school districts) may lose revenue due to capped residential assessments, they might choose to raise millage rates to cover budget shortfalls. Since commercial properties do not benefit from the assessment cap, a millage rate increase would apply to their full market value, potentially resulting in a disproportionate tax increase for commercial owners compared to homeowners.

• Sales Tax Impacts: The bill allows counties to implement a new 1% Local Homestead Option Sales Tax (LHOST) to further fund property tax reductions for homeowners. Commercial entities operating in these counties may see a shift in local consumer spending or increased operational costs related to collecting this additional sales tax. 

Summary of SB 33 Provisions

The table below summarizes the core differences in how SB 33 treats different property types: