Do You Pay Property Tax on Leased County Land? (Garcia v. Dadeland Station)

The Facts

In 1994 Dadeland Station Associates leased land from Miami-Dade County for 90 years. It built substantial buildings on the land, and those improvements were assessed and taxed to it all along. From 1994 through 2014 the land itself was assessed in the County’s name and was exempt.

For the 2015 tax year, the Property Appraiser assessed the land to Dadeland Station as its equitable owner, relying on the Florida Supreme Court’s 2014 decision in Accardo v. Brown. Dadeland Station paid under protest and sued under section 194.171. The trial court entered final summary judgment for Dadeland Station, and the Property Appraiser, Tax Collector and County appealed. The case was argued in March 2017. These are the points the lawyers argued:

• The County argued that Accardo applies the same benefits-and-burdens test to land as to buildings, and that a perpetually renewable lease is a strong factor but not a requirement. It warned that a perpetuity requirement would let tenants sign leases just under 100 years with endless non-perpetual extensions and avoid taxation.
• The panel pressed the Supreme Court’s statement, in a companion case decided the same day, that its holding in Accardo “turns on the fact that the leases are perpetually renewable,” and asked for any case finding equitable ownership of land without a perpetual lease or a nominal purchase option.
• Dadeland Station’s counsel told the court the appeal had no merit under the language of the Supreme Court’s decisions and rested on the briefs.

The Decision

The Third District affirmed in a written opinion on May 3, 2017. It held the County read Accardo too broadly. Accardo did not expand equitable ownership to reach a lease like this one.

The court followed the First District’s decision in Island Resorts Investments, Inc. v. Jones, 189 So. 3d 917 (Fla. 1st DCA), review denied (Fla. July 21, 2016), which reversed a finding of equitable ownership under a 99-year lease that gave only a right to negotiate a renewal. Dadeland Station’s 90-year lease had no perpetual renewal rights, no nominal purchase option, and none of the other signs of equitable ownership described in Island Resorts and Accardo. The trial court correctly entered final summary judgment for Dadeland Station.

The docket shows the mandate issued May 19, 2017, and no further review.

The Law

Land owned by a county is generally exempt from property tax. A private tenant’s interest in government land is treated differently depending on the lease. Under section 196.199(7), property “originally leased for 100 years or more, exclusive of renewal options,” is treated as owned by the lessee. Dadeland Station’s lease was 90 years, so that bright-line rule did not apply.

Below 100 years, the question is whether the tenant is the equitable owner, meaning it holds the real benefits and burdens of ownership. After Accardo and Island Resorts, courts look for things like a perpetually renewable lease, a right to buy for a nominal price at the end of the term, a lessor that holds title only as security, or the tenant’s perpetual dominion over the land.

A taxpayer who disputes an assessment can pay and sue in circuit court under section 194.171, which has its own short deadlines. Dadeland Station paid under protest and sued to get the money back.

Lessons

• If you lease land from a government, the term and the renewal and purchase provisions can decide whether you pay property tax on the land, not just on your buildings.
• A long ground lease under 100 years, without perpetual renewal or a nominal purchase option, did not make the tenant the taxable owner of the land in this case.
• Tax positions can change after a major court decision. Here the County taxed land for 2015 that had been exempt for 20 years, based on a 2014 ruling.
• Read the lease’s tax clause too. Dadeland Station also claimed the County had to bear the taxes under the lease; the trial court found that claim moot once the assessment fell.

Source: Garcia v. Dadeland Station Associates, Ltd., No. 3D16-1698 (Fla. 3d DCA May 3, 2017); ACIS docket.

Watch the Oral Argument

This is the recording of the actual oral argument, posted on the channel. What lawyers and judges say at argument is not the ruling; the decision is summarized above.

Is a Lessee of Government Land Its Equitable Owner for Property Tax Without a Perpetual Lease?

Go Deeper

• Does Florida's 3-Year Portability Window Apply to an Earlier Move? (Frehling v. Garcia)
• Homestead Exemption Revoked for Nine Years: The 10% Cap Still Applies (Russell v. Hassett)
• Is Sharing Your Leased Lot a Sublease or a License? (Double Park v. Kaine Parking)

Frequently Asked Questions

Do I pay property tax if I lease land from the county or city?

You generally pay tax on the buildings and improvements you own, and you may owe tax on the land if you are its equitable owner. Under section 196.199(7), a lease originally for 100 years or more, not counting renewal options, is treated as ownership. In Garcia v. Dadeland Station, a 90-year county ground lease without perpetual renewal or a nominal purchase option did not make the tenant the taxable owner of the land.

What is equitable ownership for Florida property tax?

It means the person who does not hold legal title still holds the real benefits and burdens of ownership, so the property appraiser can tax that person. Courts look at the whole lease, including perpetual renewal rights, a nominal purchase option, and whether the government holds title only as security.

Does Accardo v. Brown make every long-term ground lease taxable?

No. In Garcia v. Dadeland Station, the Third District said Accardo did not expand equitable ownership that far. It followed the First District’s Island Resorts decision, which found no equitable ownership under a 99-year lease with only a right to negotiate renewal.

How do I challenge a property tax assessment on leased land?

One route is to pay and file suit in circuit court under section 194.171, which has strict filing deadlines. Dadeland Station paid the 2015 tax under protest, sued, and won summary judgment that was affirmed on appeal.

Talk to a Florida real estate litigation lawyer

Weidner Law, P.A. handles Florida real estate disputes, title problems and appeals from St. Petersburg. If you need a real estate litigation lawyer, call (727) 954-8752 or email weidner@mattweidnerlaw.com.

Read the law yourself, free: every Florida statute and court rule is on floridarules.net.

This article is general information about Florida law, not legal advice about your situation. Reading it, watching the videos, or contacting the firm does not create an attorney-client relationship. Every case turns on its own facts, and past results do not guarantee a similar outcome. The hiring of a lawyer is an important decision that should not be based solely upon advertisements.