Beginning on Jan. 1, 2020, Florida’s state sales tax on the total commercial rent charged for renting, letting, or granting a license to use real property will decrease to 5.5%, the latest in a series of reductions over the last few years. Real property rentals subject to this tax include commercial office or retail space, warehouses and self-storage units or mini-warehouses.
The rate reductions were brought by the “It’s Your Money Tax Cut Budget” plan introduced in 2015 by then-governor Rick Scott. The goal was to reduce (and potentially eliminate) the commercial rent state sales tax, which at that time was set at 6% (and considered a hindrance in attracting new business, since Florida is the only state in the nation that levies such a tax). While the hope of repealing the tax did not come to fruition, the tax has been reduced every year since 2018.
It’s important to remember that the lower tax rate applies to rental payments for the dates on which property is occupied (as opposed to when the payment is due or paid). For example, if a rental period covers Dec. 1-31, 2019, but you pay that rent on Jan. 31, 2020, you are still subject to the 5.7% state sales tax rate and not the new 5.5% number.
As previous, this reduction only applies to the state’s commercial rent sales tax and not to surtaxes levied by counties. It also does not affect tourist development taxes on transient rentals of less than six months (for example, rent on vacation homes, seasonal rentals, short-term rentals through services like Airbnb and HomeAway).
If you rent commercial property in Florida, it’s important to know the terms of your lease and make sure the proper tax amounts are being paid. Be sure to contact your business tax CPAs if you have questions about your correct rate or any other terms of your commercial rental agreements.
All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.