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Florida Tax Rate on Commercial Real Estate Rentals Reduced January 1, 2018

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Effective January 1, 2018, the Florida Department of Revenue has reduced the sales tax on the total renting, leasing, letting or granting a license to use commercial real estate from 6% to 5.8% (in higher rate counties such as Miami-Dade the rate will fall from 7% to 6.8%). The reduction of sales tax does not impact the discretionary sales surtax.

As many landlords are out of State, it is important that business owners review the January rental invoices to ensure you are paying the reduced sales tax rate. If the rate was unchanged at 6%, reach out to your landlord to ensure your total rent due is updated. Although not required, some landlords may require an amendment to the lease to change your rate.

It is important to note that applicable tax rate may not be avoided by delayed or accelerating rent or license fee payments. For example a delayed payment, such as paying December 2017 rent in January 2018, does not qualify for a reduced sale tax rate. The law specially provides that the tax rate applicable to a rent payment is based on the date the property is occupied, not when payment is due or paid.

For more information on how any of these rules might benefit you or your business, please contact your tax advisor or Teri Kaye, Tax Partner & Partner in Charge of the Fort Lauderdale Office, at tkaye@dbllp.com.

References: Chapter 2017-36, Laws of Florida; Section 212.031(1)(c) and (e), Florida Statutes