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Will Florida Cut Tax on Commercial Leases?

  • Jan 13, 2016 | Gail Cole

 Jacksonville, Florida.

Governor Rick Scott of Florida is seeking to reduce the tax on commercial leases, which he called an “unfair tax” in his State of the State speech. Florida is one of the only states in the country that collects sales tax on commercial leases.

Florida sales tax and applicable local surtaxes apply to the “total amount of rent paid for the right to use or occupy commercial real property… unless the rent is specifically exempt.” Payments included in the total amount of rent paid, such as mortgage and insurance, are also subject to sales tax and surtax. The tax also applies to commercial rents payments between related persons, as a parent corporation to a subsidiary. See the Florida Department of Revenue’s sales and use tax on commercial real property rentals for additional details.

Senate Bill 116, introduced by Senator Dorothy Hukill (R) on January 12, 2016, would reduce the tax levied on rental or license fees charged for the use of real property from 6% to 5%. If enacted as written, it would take effect January 1, 2017.

A 1% reduction is expected to create a “two-year savings of $339” on commercial rents. Put differently: It would cost the state $339 in revenue over two years.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.