Every week, Mansion Global poses a tax question to real estate tax attorneys. Here is this week’s question.

Q. In the U.S., would the increase of commercial property taxes in an area impact—or offset—the need to increase residential property taxes?

A. Theoretically, it could, according to Brendan Lynch, a shareholder at the Central Florida law firm Lowndes, Drosdick, Doster, Kantor & Reed.

Municipalities “budget for a particular tax amount that they need,” he said. “When they set the millage rates, they're looking at [property] values.”

More: Are Property Taxes Decreasing in West Palm Beach, Florida?

Those values, determined by computer evaluation, help taxing authorities set the millage rate so they will collect the tax amount for which they have budgeted, he noted.

Many municipalities in the U.S. use a similar system, and, in some areas, different classes of property are subject to different rates.

Florida’s computer evaluation couldn’t be set up to only look at the commercial values while letting residential values go unchanged, according to Mr. Lynch. But each municipality could look at the data differently.

“They couldn't do that as a uniform policy, but could that end up being what happens? Absolutely,” he said. “They could maneuver the rates in some ways to have commercial take more of a burden than residential.”

However, that doesn’t look like it’s in the cards in the near future, Mr. Lynch noted. If anything, commercial values could decrease next year because of the Covid-19 pandemic, while residential values are likely to rise.

But it’s not clear what will happen.

“If they know commercial values are going down, how does a municipality just budget for that?” Mr. Lynch asked. “Do they simply attack their budget and try to lower it? Or do they try to keep the same budget and increase the millage rate? That will be a politically difficult question.”?

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