Third Straight Cut to Florida's Business Rent Tax
Florida Realtors has been consistently advocating for a reduction of the state sales tax rate charged for the rental, lease, or license to use real property. Prior to this effort, the state sales tax rate was 6% on all commercial leases.
During the 2019 session, the Legislature passed the third consecutive rate cut to the Business Rent Tax. Effective Jan. 1, 2020, the rate will be lowered to 5.5%.
Rate reduction provided by HB 7123
The new state sales tax rate imposed under section 212.031 of Florida Statutes, on the total rent charged for renting, leasing, letting, or granting a license to use real property, decreases from 5.7% to 5.5%.
The total rent charged includes all consideration due and payable by the tenant to the landlord for the privilege or right to use or occupy the real property. The local option discretionary sales surtax imposed by the county where the real property is located continues to apply to the total rent charged.
Sales tax is due at the rate in effect during the time the tenant occupies, or is entitled to occupy the real property regardless of when the rent is paid. Rental charges paid on or after January 1, 2020, for rental periods prior to January 1, 2020, are subject to 5.7% state sales tax, plus any applicable discretionary sales surtax. Rental payments made prior to January 1, 2020, that entitle the tenant to occupy the real property on or after January 1, 2020, are subject to the 5.5% state sales tax, plus any applicable discretionary sales surtax.
When the amount of total rent charges falls in between whole dollar amounts, the bracket system must be used to calculate the combined tax and surtax.
The decrease in the state sales tax rate for renting, leasing, letting, or granting a license to use real property does not apply to the tax imposed on parking or storage of motor vehicles, docking or storage of boats, or tie-down or storage of aircraft.
Information about the proper reporting of taxes due on commercial rentals is available on the Department of Revenue’s forms website, under Sales and Use Tax in brochure GT-800016, Sales and Use Tax on the Rental, Lease, or License to Use Commercial Real Property.