What a Florida Commercial Purchase Does to the Property Tax Bill

How the cap works

Section 193.1555 covers nonresidential property, and residential property that is not covered by the separate limitations in 193.155 or 193.1554. After the first year, a reassessment cannot raise the assessed value by more than 10% of the prior year’s assessed value (subsection 3), and the assessed value is never above just value (subsection 4). Two limits matter for underwriting:

• The cap applies to all levies except school district levies (subsection 2). School taxes are figured on just value whether or not the cap is running.
• The cap limits growth in assessed value. It does not limit the millage rate, which local governments set each year.

Update, November 4, 2026: Amendment 3 passed. Amendment 3 (CS/HJR 1F, from the 2026 special session) was approved by about 62% of Florida voters on November 3, 2026 (60% was required; unofficial results). Legislative materials describe it as lowering the annual cap on assessment increases for non-homestead property, including commercial, from 10% to 5%, effective January 1, 2027. The cap still resets when a property sells. Read the official text on the Division of Elections site and the Florida Senate bill page, and check the result, before you rely on a 10% cap for tax years from 2027. The figures in this post use the cap in effect today.

A building held for a decade in a rising market can therefore carry an assessed value far below just value, and that gap is what a sale erases.

What counts as a reset

Under subsection 5, the property is assessed at just value as of January 1 of the year following a change of ownership or control. The statute defines that as any sale, foreclosure, or transfer of legal or beneficial title to any person, and also a cumulative transfer of control, or of more than 50% of the ownership, of the legal entity that owns the property. Three points that surprise buyers and sellers:

• Entity sales count. Buying the LLC instead of the deed does not avoid the reset if more than 50% of the ownership moves, counting transfers cumulatively.
• Some transfers are excluded. The statute excludes transfers made to correct an error and transfers between legal and equitable title. For publicly traded companies, share trading on a public exchange is excluded, but a merger or acquisition is not.
• Improvements can reset too. A qualifying improvement that raises just value by at least 25% triggers reassessment on its own (subsection 5(a)).

Whether a given transfer, such as a deed between related entities or a change in a partnership, counts is a question for the property appraiser and your attorney, not for a blog post.

A worked example

Every number below is an assumption chosen for illustration. The property appraiser, not the buyer or seller, determines just value, and millage varies by taxing district.

Purchase price $5,000,000; assumed just value 85% of price. The increase is $40,500 a year. The 85% is an assumption for the example; actual just value could be higher or lower, and the appraiser applies the statutory valuation criteria to each property.

What it does to the cap rate

Suppose the listing shows $300,000 of net operating income at the $5,000,000 price, a 6.00% cap rate. The result depends on who pays the tax:

• Landlord pays taxes (gross or modified gross).If that NOI used the seller’s $36,000 bill, the buyer’s NOI is $300,000 minus $40,500, or $259,500, which is a 5.19% cap rate on the same price.
• Tenant reimburses taxes (NNN).NOI is unchanged, but the tenant’s occupancy cost rises by $40,500 a year. That matters if the lease limits pass throughs, if rent is already high against the tenant’s sales, or at the next renewal.

Run your own numbers in the cap rate calculator or the NNN deal analyzer.

What to do before you make an offer

1. Ask the broker for the current assessed value, just value and millage from the property appraiser’s record, not only the dollar bill. The gap between assessed and just value is the size of the reset.
2. Underwrite the first full year on a bill estimated from your purchase price and the local millage, and show the old bill and the estimate side by side.
3. In a net lease, read the tax clause: who pays, any cap on pass-throughs, and how a reassessment after a sale is treated. See how to buy an NNN property in Florida.
4. Expect the new assessment to show up on the bill for the year after closing, with the closing proration based on the seller’s old figures. Ask your title agent how the proration is handled and budget for the difference.

Statute references are to the Florida Statutes as published by the Florida Senate. Assessment rules are set in the Florida Constitution and statute and can change; confirm the rules in effect for the tax year you are underwriting. For the full Florida investor picture, see the Florida CRE investor guide and the Florida NNN properties page.