As you may know, Florida is the only state in the country that has a sales tax on commercial rent and now, effective January 1, 2018, that tax rate has been reduced. Some believe that the sales tax on commercial rent has put the state at a disadvantage when trying to attract new businesses. This reduction is the first step in eliminating that disadvantage.
§ 212.031, Fla. Stat., has been amended to decrease the tax rate from 6% to 5.8%. Rental charges paid on or after January 1, 2018 for rental periods prior to January 1, 2018 will still be taxed at the 6% percent rate, but any payments made prior to January 1, 2018 that entitle the tenant to occupy the real property after January 1, 2018 shall be taxed at the 5.8% rate.
Some examples of real property subject to this decrease are commercial office or retail space and warehouses. Please note however, that taxes are not reduced for leasing of rental spaces for motor vehicles, including storage space for towed vehicles, boat docks and marinas, or aircraft hangars which lease storage space.
Discretionary sales tax rates imposed by counties still apply. Orange County charges a .5% discretionary sales tax whereas Seminole count charges a 1% discretionary sales tax rate. These rates are in addition to the 5.8% sales tax rate.
This is great news to share with your commercial clients. Leases should be amended to reflect this new, lower rate. Barry Miller Law is available to assist in the review and drafting of these new amended leases to ensure that they meet the requirements as mandated by this change in law.
Barry Miller Law is familiar with all aspects of real estate transactions and leasing. If you have questions concerning lease tax rates—or other real estate questions—please contact our office by calling 407-423-1700 or by emailing firstname.lastname@example.org.