Overview of Florida’s Tax System

Florida’s tax system is distinctive, featuring sales tax on commercial rentals and a gradual reduction in the sales tax rate over time. It’s crucial to understand this law for those leasing or renting commercial real estate.

Sales Tax Application to Commercial Rentals

Sales tax applies to the rental, lease, or licensing of commercial real property in Florida, covering various payments such as base rent and additional fees. Before engaging in commercial leasing, lessors must register with the Florida Department of Revenue.

Reduction in Sales Tax Rate

Currently, the sales tax rate on commercial property rentals in Florida is 4.5%, decreasing to 2% from June 1, 2024 (originally planned for July 1, 2024). Some counties may impose a surtax, ranging from 0.5% to 1.5%.

Understanding Business Rental Tax

The business rental tax encompasses rentals of various commercial spaces but excludes certain entities like parking lots and aircraft hangars.

Considerations for Individuals and Businesses

Individuals and businesses relocating or establishing in Florida should consider this unique tax scenario, especially with the significant reduction in the sales tax rate.

Key Points for Lessors

Lessors should be aware of the reduced state sales tax rate effective from June 1, 2024, and update records accordingly. This includes understanding the applicable rates based on rental periods.

Exclusions and Rates for Transient Rentals

Transient rentals lasting six months or less are exempt from the reduced tax rate and are subject to a 6% state tax rate and local taxes.

Additional Resources

For more details on the reduced tax rate, refer to the Department of Revenue’s Tax Information Publication 24A01-02.