Posted in Business & Corporate Law,Real Estate Law
Florida imposes sales tax on rental payments for the lease of commercial real estate. The 6% state-level tax was reduced to 5.8% for 2018. The Florida legislature passed another law to further reduce the state-level rate to 5.7% for occupancy periods beginning on or after January 1, 2019.
There is no reduction in the local option surtax that many Florida counties impose in addition to the 5.7% rate. The local option surtax varies between 0.5% to 1% for those counties that impose it. In St. Johns County for example, the surtax is an additional 0.5%.
Commercial property owners and management companies should be aware of this reduction for lease payments related to periods starting next year in 2019. It is recommended to adjust invoices for rental periods commencing on or after January 1, 2019 to account for the 0.1% reduction in the state tax rate.
It is also important to remember that a lease of residential property is subject to the sales tax on transient rentals unless the rental is under a bona fide written lease for a period of longer than six months. The rate of this tax on transient rentals will remain at 6% (plus local option surtax).
Furthermore, a lease of residential real property that is taxable as a transient rental (because it does not satisfy the six-month bona fide written lease requirement) is also subject to local tourist-development taxes. The rate on these local tourist-development taxes varies from 5% to 7% for most major counties. There is no reduction in the tax rates of these local tourist-development taxes.