Reminder: Florida commercial renters should review their rent payments
Earlier this spring, Florida Gov. Rick Scott signed House Bill 7109, providing for a reduction in the real property rental sales tax from 6 percent to 5.8 percent effective Jan. 1, 2018.
The sales tax on real property rental or license fees, also known as the commercial rent sales tax, applies to the leases, rentals, or licenses to use real property including commercial office space, retail space including restaurant space, warehouses, self-storage units, and other similar real property. The sales tax rate reduction on the rental of commercial property does not apply to car parking, or storage spaces for vehicles, boats, and aircraft. The state tax rate for those rentals will continue to be 6 percent in addition to any county discretionary surtax.
Commercial lessors and lessees should note that the county discretionary surtax is unaffected by the reduction in the state rate. For example, the state and local tax rate on the rental of retail space in Miami-Dade County beginning on Jan. 1, 2018, would include the state tax rate of 5.8 percent, and a Miami-Dade County tax rate of 1.0 percent, for a total tax rate of 6.8 percent.
House Bill 7109 also clarified that the tax rate in effect at the time that the tenant or person occupies, uses, or is entitled to occupy or use the real property is the tax rate applicable to the transaction taxable, regardless of when a rent or license fee payment is due or paid. The applicable tax rate may not be avoided by delaying or accelerating rent or license fee payments. Essentially, that provision prohibits tenants of qualifying taxable real property rentals from delaying rent payments until 2018 in order to receive a reduced tax rate. However, rental payments made prior to Jan. 1, 2018, that entitle a tenant to occupy the real property after Jan. 1, 2018, will be subject to the reduced rate.
Lessors and lessees of commercial real property should review their current or upcoming real property rental payments to confirm the correct state tax rate is charged. The Florida Department of Revenue has provided additional information on the rate reduction in TIP 17A01-14.