A South Dakota law change now lets owners of garages on separate land parcels claim the lower owner-occupied property tax rate—but most don't know it exists.
Most construction and trades owners in South Dakota don't realize that a garage or workshop sitting on a separate parcel from their home may have been taxed at the higher commercial rate—even though they own it personally. South Dakota's SB154 changes that.
The bill clarifies that garages and ancillary structures (like storage buildings or workshops) located on separate land parcels can now be classified as part of an owner-occupied single-family dwelling for property tax purposes. In plain terms: if you own a garage on its own parcel next to your home, that parcel is now eligible for the lower owner-occupied property tax assessment rate instead of the higher commercial or non-owner-occupied rate.
This distinction matters because owner-occupied property is taxed at a significantly lower rate than commercial or investment property. The difference can mean hundreds or thousands of dollars annually, depending on the parcel's assessed value.
This provision is most relevant to:
If your garage, workshop, or ancillary structure has been assessed and taxed separately from your home, SB154 may lower your tax bill going forward.
The provision is found in Section 1 of SB154 (Page 1). It explicitly expands the definition of owner-occupied single-family dwellings to include separate land parcels on which garages or ancillary structures sit, provided the owner occupies the primary dwelling on the adjoining or related parcel.
For specific effective dates and implementation windows, refer to the bill text itself, as these details govern when assessors must apply the new classification to existing and new properties.
If you own a garage or workshop on a separate parcel:
Assessors are familiar with this change, and the reclassification process is straightforward. Depending on when your property was last assessed, you may be eligible for retroactive adjustments or immediate rate changes on your next bill.
For a detailed, business-specific guide to SB154 and how it applies to your situation, contact your local South Dakota trade association or county assessor's office.
Source: South Dakota SB154, Section 1, Page 1.