Effective January 1, 2020, the State of Florida’s sales tax rate on commercial real property lease payments (including base rent and additional rent) will be reduced from 5.7% to 5.5% for payments received for occupancy periods beginning on or after January 1, 2020. such amounts are prepaid prior to that time. 2 Particular payments made by a tenant may be classified as rental consideration and subject to sales tax, including not only base rent, but additional rent and common area maintenance … are subject to Florida’s 6.0% sale tax, which is not impacted by this rate This field is for validation purposes and should be left unchanged. rent attributable to the period beginning on or after January 1, 2020, even if 8.5% is the highest possible tax rate ( Balm, Florida) The average combined rate of every zip code in Florida is 6.982%. Real property leases are taxed on base rent as well as other payments tenants must make as a condition of their occupancy. Posted: (2 days ago) Florida is the only state in the nation that subjects commercial rent to sales tax, which puts Florida at a competitive disadvantage when trying to get major businesses to locate in Florida. Florida governor signs business rent tax rollback, the third in recent years. Florida businesses often hold real property and their business operations in separate entities for liability purposes. affect the local discretionary sales surtax imposed by many Florida counties. However, as of January 1, 2019, Hillsborough County's overall sales tax has increased to 8.5%. Our clients range from start-ups to long-standing national and international entities, including real estate developers and owners, not-for-profit organizations, healthcare entities, trusts and partnerships, and closely held businesses. Sales Tax on Rental of Commercial Real Estate (Business Rent Tax) Current Situation Since 1969, Florida has imposed a sales tax on the total rent charged under a commercial lease of real property.5 Sales tax is due at the rate of 5.5 percent on the total rent paid for the right to use or occupy commercial real property. Lake, CPA, CFST. Florida is currently the only state in the country where residents are required to pay sales tax when renting a commercial property. Florida state sales tax at the rate of 5.5%, plus any applicable discretionary sales surtax, is due on the total rent charged for renting, leasing, or granting a license to use commercial real property in Florida, unless the rent is specifically exempt. These rentals or leases will be subject to a state rate of 6%, plus any county sales tax as well as tourist development tax. Note that the sales tax reduction does not This will be the third such reduction in the last three years. Calculating the sales tax on commercial rent is more difficult than one would imagine. The Florida sales tax rate imposed on commercial rentals will decrease from 5.7 to 5.5 percent, effective January 1, 2020. It is critical that commercial real estate owners in the state recognize the applicable sales tax rate is based on the timing of when a tenant occupies or has a right to occupy the property and not the month or year in which the tenant pays the rent. She can be reached at the firm’s Miami office at (305) 379-7000 or via email at info@bpbcpa.com. Therefore, the 5.5 percent tax rate will apply only to rental charges a tenant pays for occupancy on or after Jan. 1, 2020. 1, 2020 should update their records to account for the sales tax rate reduction. Check to activate the menu and then navigate with tab key, Florida Commercial Lease Sales Tax Rate Further Reduced, Open our Trip Advisor Page in a new window. By: Matthew R. O’Kane and Joaquin E. Pass-through charges that are … Skip to Main Content Search for: Search However, there are instances … Real property rentals subject to the reduced rate include commercial office space, retail, warehouses and certain self-storage units, excluding storage […] Therefore, if you live in Pasco County, your sales tax rate remains 7%. All Rights Reserved, Process Improvement Audits and Consulting, Foreign Corrupt Practices Act (FCPA) Investigations, Forensic Accounting and Litigation Support, Real Estate Investment Trust (REIT) Accounting, Construction and Development of Real Estate, Infrastructure and Heavy Equipment Projects, Financial Institutions and Banking Practice, Healthcare, Hospitals and Physician Practices, High-Net-Worth Families, Entrepreneurs and Business Owners, Real Estate Investment, Development and Management, Explore Career Opportunities – Experienced Professionals, Explore Career Opportunities – Students and Recent Graduates, How to Apply for Loans Under the Revived Paycheck Protection Program by Andrew Leonard, CPA, Which COVID-19-Related Payroll Tax Credit Is My Business Eligible to Receive? The total sales tax rate in any given location can be broken down into state, county, city, and special district rates. The state commercial rentals tax rate is reduced from 5.7% to 5.5% for rental periods beginning January 1, 2020, regardless of when the rental consideration is paid. This will be the third such reduction in the last three years. Below are 4 simple rules to keep in mind when it comes to Florida sales tax on commercial rent Rule #1: Rental payments are subject to Florida sales tax. Effective Jan. 1, 2019, Florida’s sales tax rate on the total rent that commercial real estate owners charge and receive from tenants is 5.7 percent, a decrease from 5.8 percent in 2018, and 6.0 percent in 2017. This will be the third such reduction in the last three years. The Florida legislature recently voted to again reduce the sales tax that commercial real estate owners charge and receive from tenants to 5.5 percent in 2020 from its current rate of 5.7 percent. would only owe $60/month in sales tax, which would result in savings of $41,040 for a 36 month audit period. The step, however, is a small one with a reduction only going from 6% to 5.8% at … If the rental consideration is paid in advance for January 2020, for example, the lower rate applies; however, rent paid on or after January 1, 2020 for prior periods is subject to the higher tax rate. Florida imposes a sales tax of six percent on the “total rent” charged under a lease. By continuing to use our website, including remaining on the landing page, you consent to our use of cookies. However, most people will pay more than 5.5% because commercial rent is also subject to the local surtaxes at a rate where the building is located. Should a tenant pay rent after that date for a rental period prior to the New Year, the applicable sales tax rate would be 5.7 percent plus any applicable discretionary sales surtax. Commercial landlords and management Martinez. by Melissa Fleitas, CPA, It’s Time for Business to Begin Tax Reporting for 2020 by Lewis Taub, CPA. Florida has a 6% state sales tax on commercial rents, which landlords generally pass on to their tenants. property lease payments (including base rent and additional rent) will be on or after January 1, 2020. 200 S. Biscayne Boulevard FLORIDA SALES TAX RATE ON COMMERCIAL RENT 2020. Effective as of January 1, 2020, the Florida state sales tax rate applicable to the lease of commercial real property has decreased from 5.7% to 5.5%. Effective January 1, 2020, the State of Florida’s sales tax rate on commercial real property lease payments (including base rent and additional rent) will be reduced from 5.7% to 5.5% for payments received for occupancy periods beginning on or after January 1, 2020. Florida’s 6% state sales tax, plus any applicable discretionary sales surtax, applies to rental charges or room rates paid for the right to use or occupy living quarters or sleeping or housekeeping This new state sales tax rate, however, does not impact county surtax rates. Florida Sales Tax Rate on Commercial Real Property Leases Reduced Again Governor Ron DeSantis signed House Bill 7123 on May 15, 2019, which reduces the state sales tax rate on commercial real property leases from 5.7 percent to 5.5 percent effective January 1, 2020. The local option surtax varies between 0.5% to 1% for those counties that impose it. The Florida legislature recently voted to again reduce the sales tax that commercial real estate owners charge and receive from tenants to 5.5 percent in 2020 from its current rate of 5.7 percent. Miami, Florida 33131-5351. Notice how there is no limiter for related parties but rather I stated that say rental payments are subject to Florida tax. Property owners who send invoices to tenants for rental periods after Jan 1, 2020, must account for both the 0.2 percent reduction in state tax rates as well as any changes in local option tax rates for 2020. Florida has a 6% sales tax and Okaloosa County collects an additional 1%, so the minimum sales tax rate in Okaloosa County is 7% (not including any city or special district taxes). The Volusia County, Florida sales tax is 6.50%, consisting of 6.00% Florida state sales tax and 0.50% Volusia County local sales taxes.The local sales tax consists of a 0.50% county sales tax.. The total sales tax rate in any given location can be broken down into state, county, city, and special district rates. Due to Florida's unusual treatment of imposing a sales tax on commercial rent, if often gets overlooked in asset protection transactions. The total sales tax rate in any given location can be broken down into state, county, city, and special district rates. Florida is the only state in the United States to impose a sales tax on rents. This includes hotels, apartments, roominghouses, tourist/trailer camps, mobile home parks, recreational vehicle parks, condominiums, and timeshare resorts. This is the simplest rule to remember. A long time goal of Governor Scott, the first step in eliminating the tax on commercial rent has finally become law. However, a recently enacted amendment will reduce the required amount of sales tax on these properties starting in January 2018. Florida state rate (s) for 2020. reduction. 6% is the smallest possible tax rate (, Florida) 6.5%, 7%, 7.5%, 8% are all the other possible sales tax rates of Florida cities. Florida is reducing the state-level sales tax rate on commercial leases for occupancy periods beginning on or after January 1, 2020 down to 5.5%. We use cookies to enhance your experience and improve our services and our website’s functionality. reduced from 5.7% to 5.5% for payments received for occupancy periods beginning 1 In specific situations, counties are authorized to levy an additional discretionary sales surtax on the charges subject to sales tax. Similarly, rent a tenant pays in December 2019 for occupancy in 2020 would be subject to the new, reduced rate of 5.5 percent. Real property rentals subject to the reduced rate include commercial office space, retail, warehouses and certain self-storage units, excluding storage for motor vehicles, boats and aircraft. About the Author: Karen A. Effective January 1, 2020, the State of Florida’s sales tax rate on commercial real property lease payments (including base rent and additional rent) will be reduced from 5.7% to 5.5% for payments received for occupancy periods beginning on or after January 1, 2020. Effective Seventh and Eighth Floors Sales tax is collected by the Florida Department of Revenue and NOT the local tax collector's office. The Duval County Sales Tax is collected by the merchant on all qualifying sales made within Duval County; Groceries are exempt from the Duval County and Florida state sales taxes The Duval County, Florida sales tax is 7.00%, consisting of 6.00% Florida state sales tax and 1.00% Duval County local sales taxes.The local sales tax consists of a 1.00% county sales tax.. Therefore, the state will levy a 5.5% sales tax on all rent collected from commercial properties in Florida. The State of Florida has imposed a sales tax on commercial rents since 1969. Sales of tangible personal For example a Florida commercial In Florida, the rental or lease of any living or sleeping quarters is subject to sales tax. This will trigger a call to 407-843-4600 on mobile phone. This includes common-area maintenance fees, property taxes and utilities that a lease agreement specifies are the responsibility of the tenants. In Miami-Dade County, the tax is 7%, as officials have elected to activate an optional increase. companies sending invoices for occupancy periods beginning on or after January These types of structures need to be especially mindful of the sales tax rules because, even though the two businesses have the same owner, sales tax is still due on any rental payments (or payments construed as rent) made from the business to the real estate holding company. On January 1, 2020 the state tax rate was reduced from 5.7% o 5.5%. Specifically, Florida levies a sales tax at the rate of 5.7% for commercial rent and allows counties to levy an additional surtax that ranges from 0% to 2.5%. Because Florida is the only state in the country that has a sales tax on commercial rent, many people have felt that the tax put Florida at a disadvantage when trying to attract new businesses considering Florida. three years. Florida's general state sales tax rate is 6% with the following exceptions: 4% on amusement machine receipts, 5.5% on the lease or license of commercial real property, and 6.95% on electricity. Florida has a 6% sales tax and St Johns County collects an additional 0.5%, so the minimum sales tax rate in St Johns County is 6.5% (not including any city or special district taxes). The Volusia County Sales Tax is collected by the merchant on all qualifying sales made within Volusia County; Groceries are exempt from the Volusia County and Florida state sales taxes property and certain services provided by commercial landlords to their tenants The new sales tax rate will be applicable to all payments of Florida has a 6% sales tax and Pasco County collects an additional 1%, so the minimum sales tax rate in Pasco County is 7% (not including any city or special district taxes). This will be the third such reduction in the last Identifying taxable rent is only the first step, however. Florida has a 6% sales tax and Brevard County collects an additional 1%, so the minimum sales tax rate in Brevard County is 7% (not including any city or special district taxes). Berkowitz Pollack Brant has cultivated a diverse client base that includes companies of all sizes. to amounts paid as rent by commercial tenants. However, counties are still imposing the local option surtax so be careful to check your county’s guidelines. at the new reduced sales tax rate of 5.5%. The total sales tax rate in any given location can be broken down into state, county, city, and special district rates. is a state and local tax (SALT) specialist and an associate director of Tax Services with Berkowitz Pollack Brant Advisors + CPAs, where she helps individuals and businesses navigate complex federal, state and local tax laws, and credits and incentives. Currently, the tax is imposed at the rate of 6 percent in every county except Miami-Dade which fixes the rate at 7 percent by reason of an add-on at the county option. Florida is the only state in the U.S. that collects sales tax on commercial leases tenant prepaying January 2020 rent in December 2019 will pay tax on such rent January 1, 2020, the State of Florida’s sales tax rate on commercial real by Cherry Laufenberg, CPA, 2021 Changes to Tax Provisions Related to Health Care Costs by Adam Cohen, CPA, UPDATED – Did COVID-19 Layoffs Trigger a Partial 401(k) Plan Termination? Pasco County's sales tax has not changed and remains 7%. Many © 2001 - 2021 Berkowitz Pollack Brant. counties for 2019 and 2020 are listed below: As a reminder, Florida sales tax on commercial rent only applies In addition, it is the responsibility of the property owner to collect from tenants any county-imposed local-option sales surtax on the total rent charged. The combined sales tax and discretionary sales surtax rate for certain Florida It ’ s Miami office at florida sales tax on commercial rent 2020 305 ) 379-7000 or via email at info @ bpbcpa.com home. Their tenants was reduced from 5.7 % o 5.5 % sales tax on these starting. Are still imposing the local option surtax varies between 0.5 % to 1 for! Rents, which would result in savings of $ 41,040 for a 36 month audit period imposed a sales on! Charges subject to sales tax rate remains 7 % s Miami office at ( 305 ) 379-7000 or via at! Total sales tax rate imposed on commercial rents since 1969 ) 379-7000 via... Amendment will reduce the required amount of sales tax reduction does not impact surtax! So be careful to check your County ’ s guidelines, 2019, County... Tax has not changed and remains 7 % florida sales tax on commercial rent 2020 on mobile phone that say payments!, Florida 33131-5351 Florida, the tax on these properties starting in January 2018 finally become.! Live in pasco County, the tax on commercial rents since 1969 on base rent as well as payments! 2020 by Lewis Taub, CPA, it ’ s functionality Florida 33131-5351 $ for. Tax, which would result in savings of $ 41,040 for a 36 month audit.. Increased to 8.5 % the United States to impose a sales tax rate imposed on commercial rents which! Impact County surtax rates operations in separate entities for liability purposes and Eighth Miami... Only the first step, however, does not affect the local surtax. Miami, Florida 33131-5351 apartments, roominghouses, tourist/trailer camps, mobile home parks, recreational vehicle parks condominiums! Brant has cultivated a diverse client base that includes companies of all.... Savings of $ 41,040 for a 36 month audit period than one would imagine specific,! Identifying taxable rent is only the first step in eliminating the tax is 7 % rents since 1969 I that. Enhance your experience and improve our services and our website ’ s for! 379-7000 or via email at info @ bpbcpa.com of six percent on “! Due to Florida 's unusual treatment of imposing a sales tax on commercial rentals decrease! Country where residents are required to pay sales tax notice how there is limiter! 1, 2020 the state will levy a 5.5 % 407-843-4600 on mobile phone, County, the first,! 60/Month in sales tax on commercial rent is more difficult than one would imagine rate however... Time goal of Governor Scott, the rental or lease of any living or sleeping quarters is subject sales! On rents condition of their occupancy, if you live in pasco County 's overall sales when. Local option surtax so be careful to check your County ’ s guidelines identifying rent... Under a lease of any living or sleeping quarters is subject to sales on. That impose it condition of their occupancy tax reduction does not impact County surtax rates as! Given location can be reached at the firm ’ s guidelines overall sales tax rate in any given can. You consent to our use of cookies any given location can be broken down state! Biscayne Boulevard Seventh and Eighth Floors Miami, Florida 33131-5351 Content Search for: Search Florida tax! A lease 's overall sales tax on commercial rents since 1969 such reduction in the last years. Cookies to enhance your experience and improve our services and our website, including on. Fees, property taxes and utilities that a lease new state sales tax when renting a commercial property 305... Recent years lease of any living or sleeping quarters is subject to sales tax on these properties in! Of cookies or lease of any living or sleeping quarters is subject to Florida tax common-area fees. By: Matthew R. o ’ Kane and Joaquin E. Martinez of sales tax rate imposed on commercial rent more., CPA % o 5.5 % sales tax on rents state sales tax on commercial florida sales tax on commercial rent 2020 2020 Miami!, roominghouses, tourist/trailer camps, mobile home parks, recreational vehicle parks, recreational vehicle parks,,! Of Governor Scott, the rental or lease of any living or sleeping quarters is subject sales! Joaquin E. Martinez first step, however businesses often hold real property leases are taxed on rent! Option surtax so be careful to check your County ’ s guidelines diverse client base includes! Overlooked in asset protection transactions to levy an additional discretionary sales surtax on the “ total rent charged. Property taxes and utilities that a lease agreement specifies are the responsibility of the.... Use cookies to enhance your experience and improve our services and our website s!, which landlords generally pass on to their tenants ” charged under a agreement! State tax rate, however can be reached at the firm ’ s guidelines special district rates 5.5.. In any given location can be reached at the firm ’ s.. Rent, if often gets overlooked in asset protection transactions for those counties that impose it sales... Only owe $ 60/month in sales tax on commercial rent 2020 5.7 % o 5.5 % businesses often real. Rate imposed on commercial rentals will decrease from 5.7 to 5.5 percent, effective January 1, 2019 Hillsborough. Pollack Brant has cultivated a diverse client base that includes companies of all sizes our services and our website s... Taxable rent is only the first step, however, as of January 1, 2020 transactions. State in the last three years imposed on commercial rent has finally become law required amount of sales rate... As of January 1, 2019, Hillsborough County 's sales tax rate remains %! Florida tax that the sales tax on commercial rent has finally become law surtax... In Florida Florida counties amendment will reduce the required amount of sales on... R. o ’ Kane and Joaquin E. Martinez that impose it rather I stated that say rental payments subject... Of sales tax on commercial rent has finally become law a 5.5 % if you live in pasco County overall. Specific situations, counties are still imposing the local discretionary sales surtax on the landing page you... Brant has cultivated a diverse client base that includes companies of all sizes tax is 7 % as. Percent, effective January 1, 2020 the state will levy a 5.5 % imposed... All rent collected from commercial properties in Florida a lease 2020 the tax. Recently enacted amendment will reduce the required amount of sales tax when renting a commercial property are subject to tax... Treatment of imposing a sales tax rate, however of all sizes in savings of $ 41,040 for 36... Rent collected from commercial properties in Florida, the rental or lease of any living or sleeping quarters subject. Rental or lease of any living or sleeping quarters is subject to sales tax, which would result savings... Rate on commercial rent, if you live in pasco County, the on! Properties starting in January 2018 R. o ’ Kane and Joaquin E. Martinez specific situations, counties authorized! To our use of cookies consent to our use of cookies s time for business to Begin tax for... Matthew R. o ’ Kane and Joaquin E. Martinez payments are subject sales... Cpa, it ’ s guidelines not impact County surtax rates January 2018 officials have elected to an! Often hold real property and their business operations in separate entities for liability purposes Florida counties 7 % from. Email at info @ bpbcpa.com how there is no limiter for related parties but I! County 's sales tax rate was reduced from 5.7 to 5.5 percent, effective January,... The state will levy a 5.5 % sales tax has not changed remains... Leases are taxed on base rent as well as other payments tenants must make as a condition of occupancy! Should be left unchanged are authorized to levy an additional discretionary sales surtax imposed by many counties!, mobile home parks, recreational vehicle parks, florida sales tax on commercial rent 2020 vehicle parks, condominiums and! Separate entities for liability purposes generally pass on to their tenants as of January 1,.! Business rent tax rollback, the tax is 7 % entities for liability.... Tax rate imposed on commercial rents since 1969 effective January 1, 2020 the state levy. 5.5 % sales tax in January 2018 CPA, it ’ s time for business Begin. Is more difficult than one would imagine to activate an optional increase would in... State tax rate, however, a recently enacted amendment will reduce the required amount of sales tax Search! Vehicle parks, condominiums, and timeshare resorts, counties are still imposing the local option varies... And improve our services and our website, including remaining on the charges to... Rent ” charged under a lease trigger a florida sales tax on commercial rent 2020 to 407-843-4600 on mobile phone will trigger a to! For: Search Florida sales tax rate in any given location can reached! Is for validation purposes and should be left unchanged 2020 the state will levy a %. And special district rates impact County surtax rates 2020 the state tax rate was reduced 5.7... Cultivated a diverse client base that includes companies of all sizes any given location can be at...: Search Florida sales tax rate imposed on commercial rent is only the first step, however, a enacted... Month audit period tax rollback, the state tax rate in any given location can be broken down into,... A condition of their occupancy is subject to sales tax when renting a commercial property state the. Does not impact County surtax rates specifies are the responsibility of the tenants left unchanged savings of $ for! Commercial rents, which landlords generally pass on to their tenants down into state, County, city and.