Commercial Property Taxes, After Passing Amendment 3
Amendment 3 slows assessment growth on commercial buildings, but lease structure, millage decisions and the reset at sale will decide who pays the tax and how buyers price it.
Commercial property taxes in Florida will be assessed under a new limit starting January 1, 2027. Amendment 3, approved by about 62% of voters on November 3, 2026, cuts the annual cap on assessment increases for non-homestead property from 10% to 5% for non-school taxes. That cap covers office, retail, industrial and mixed-use buildings, and the owner-users and investors who hold them.
The effect arrives quickly. The new rules first appear on August 2027 TRIM notices and November 2027 tax bills, inside the hold period of almost every asset now being bought, sold or refinanced. A tax line that once rose on a familiar path now depends on how each county and city replaces the revenue it gives up.
Yet a lower cap does not mean a lower bill, and the savings do not land evenly. Who benefits depends on lease structure, school levies and local budgets, and the benefit disappears at a sale. This article explains how owners, tenants and buyers of commercial and mixed-use property should read the change.
What Amendment 3 Changes for Commercial Property Taxes
The cap limits growth in assessed value, not the tax rate. Local governments can still raise millage, and school district taxes continue to be levied on full market value, outside the cap. For a building whose market value is flat, the change does little; it matters where values are rising faster than 5% a year.
The measure's largest benefit, a higher homestead exemption, goes to primary residences. The Tax Foundation puts the first-year cost of that exemption to local governments at about $4.9 billion. The Tax Foundation expects businesses, landlords and recent buyers to carry a larger share of local budgets through higher effective tax rates.
Owner-users face a second exposure. Business tangible personal property, such as equipment, fixtures and machinery, is taxed at the same local millage as real property and made up 5.5% of statewide taxable value in 2025. Only the first $25,000 of it is exempt, so a millage increase reaches a medical practice's equipment or a distributor's racking as well as the building.
Who Pays: Net Lease Property Taxes and Gross Leases
The lease decides who carries a tax change. Under a triple net lease, the tenant reimburses real estate taxes, so net lease property taxes fall on the occupant and the landlord's income is largely insulated. Under a gross or modified gross lease, the landlord pays the taxes, often recovering only increases above a base year.
That difference shapes value. A single-tenant net lease building in Doral or Boca Raton prices mainly on tenant credit and lease term, because taxes pass through. A multi-tenant Brickell office building on base-year leases carries any tax increase in net operating income until those leases roll.
Tenants feel it as total occupancy cost, and they weigh taxes alongside rent when they renew. Whether landlords can push higher taxes into rent depends on the market. The Tax Foundation cites a 2018 study of Massachusetts office markets that found urban landlords recovered about $1.06 to $1.39 of rent for each $1.00 of tax increase, versus $0.52 to $0.67 in suburban markets.
How Buyers Price the Tax Line on Commercial Assets
A commercial building is reassessed at full market value on the January 1 after a change of ownership or control, so a seller's capped assessment does not transfer. Buyers price the tax line on these factors:
Purchase-price reassessment. Underwriting starts from the tax on the price being paid, not from the seller's trailing bill.
The capped-value gap. The longer a seller has held under the cap in a rising market, the larger the step-up the buyer absorbs after closing.
Recovery by lease. Each lease is read for tax reimbursement, base years and any caps on recoverable expenses, so the buyer knows how much of an increase the tenants actually repay.
Vacant space. Taxes on unleased space are not recovered, so vacancy turns a pass-through expense into an owner cost.
Lease rollover. Base years reset at renewal, so the timing of rollover determines when higher taxes can move into rent.
Local millage room. Jurisdictions near the 10-mill operating cap have less room to raise rates, and may lean on fees instead.
School levy on full value. The school portion of the bill moves with market value every year, regardless of the cap.
Pricing reflects in-place income, recoverable expenses and a tax bill reassessed at the purchase price.
Commercial Property Tax Appeals Carry More Weight
A 5% cap compounds from the prior year's assessed value, so a lower assessment today keeps future bills lower for every year the owner holds. Under a tighter cap, each assessment an owner accepts sets the base for the years that follow.
The window is short. An owner who disagrees with the value on the TRIM notice can request an informal conference with the property appraiser, and has 25 days after the notice is mailed, usually in mid-August, to file a petition with the county value adjustment board. In Miami-Dade, Broward and Palm Beach counties, that deadline falls in the same weeks local governments hold their budget hearings.
A supported appeal rests on documents: rent rolls, operating statements, recent comparable sales and a credible income approach. The same documents support a sale price or a lender's view of value, so the work rarely goes to waste.
What Owners Should Consider First
Who bears a tax increase in this building today? The answer sits in each lease's tax clause, base year and expiration date. Owners of multi-tenant buildings should know how much of a millage increase stays with them and for how long.
What will a buyer assume about taxes after a sale? A buyer will price the reassessed bill, not the current one. A confidential broker opinion of value that models the reassessed tax gives the asking price a basis the seller can defend.
Should the 2027 assessment be reviewed before the deadline? A value accepted in 2027 carries forward into every later year of the hold. Owners should review the August 2027 TRIM notice promptly and discuss the specific tax effects with their tax advisors.
Commercial Property Taxes, Read Lease by Lease
Amendment 3 slows assessment growth on commercial buildings, but it does not fix millage, the school levy or the reset at sale. For owners, tenants and buyers, commercial property taxes are now underwritten lease by lease and jurisdiction by jurisdiction, and they belong at the start of any sale process, not the end.
Sources
Mundial Capital advises owners and investors on commercial real estate investment sales and debt advisory, from single assets to portfolios, with a principal leading every engagement from first conversation through closing.
Contact Mundial Capital, LLC at (305) 564-8900 or visit our offices at 1221 Brickell Avenue, Suite 900, Miami, Florida 33131.
Considering a sale or a financing? Speak with a principal.
Mundial Capital, LLC is a licensed real estate brokerage. This article is general information and is not legal, tax, or financial advice. Market conditions, financing, and pricing vary by property and should be reviewed with qualified professionals. Mundial Capital is not a mortgage lender, mortgage broker, loan originator, securities broker-dealer, or investment adviser, and does not make loans or issue loan commitments. Its debt advisory services are limited to commercial real estate financing for business-entity borrowers, placed with institutional lenders; approval, terms, and timing rest with the lender. Nothing in this article is an offer to lend or to sell or buy securities.
