One of the quirky aspects of Florida’s sales tax system is the enduring tax on commercial rents. While Florida is the only state that still taxes commercial rents, there is some good news for 2020. Section 212.031 of the Florida Statutes has been amended to reduce the applicable sales tax rate from 5.7% to 5.5% on rent payments received for occupancy periods beginning on or after January 1, 2020. This is the third reduction of this tax in the last three years.
The timing of the payment is very important. This new sales tax rate will be applicable to all payments of rent attributable to the period beginning on January 1, 2020, even if such amounts are prepaid prior to that time. By way of example, if a Florida commercial tenant prepays their January 2020 rent in December 2019, the taxes paid will be at the reduced rate of 5.5%. Conversely, if the Tenant is behind and pays for December 2019 rent in January 2020, they will pay tax at the old rate of 5.7%. Commercial landlords and management companies sending invoices for occupancy periods beginning on or after January 1, 2020 should update their records to account for the sales tax rate reduction. For those commercial landlords in Hillsborough County, this means that the sales tax rate charged for your leases will be reduced from 8.2% to 8.0%.
The real estate attorneys at Bivins & Hemenway, P.A., are ready to assist commercial landlords with guidance on sales tax and other commercial lease issues.