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The State of Florida’s sales tax rate on commercial real property lease payments will be reduced from 5.7% to 5.5% for payments received for occupancy periods beginning on or after January 1, 2020. This will apply to both base rent and additional rent.

The new sales tax rate will apply to all rent payments attributable to the period beginning on or after January 1, 2020, even if they are prepaid prior to that time. For example, if a Florida commercial tenant prepays their January 2020 rent in December 2019, the sales tax they will pay on this rent will be at the new, reduced rate of 5.5%.

Commercial landlords and management companies sending invoices for occupancy periods beginning on or after January 1, 2020 should update their records and/or invoicing tools to account for the change to the sales tax rate.

Note that the sales tax reduction does not affect the local discretionary sales surtax imposed by some Florida counties, which ranges from 0.5% to 2.5%. The combined sales tax and discretionary sales surtax rate for these Florida counties for 2019 and 2020 are listed below:

Brevard County6.7%6.5%
Hillsborough County8.2%8.0%
Lake County6.7%6.5%
Orange County6.2%6.0%
Osceola County7.2%7.0%
Pinellas County6.7%6.5%
Polk County6.7%6.5%
Seminole County6.7%6.5%
Volusia County6.2%6.0%

It’s important to note that Florida sales tax on commercial rent only applies to amounts paid as rent by commercial tenants. The sale of tangible personal property as well as services provided by commercial landlords to their tenants are subject to Florida’s 6.0% sale tax, which has not changed and is not affected by this change to the sales tax on commercial leases.

This article is intended to provide a general guide on the subject matter. Consult a tax professional for advice on your specific circumstances.

If you are interested in business tax services in Clearwater, Largo, Dunedin, Oldsmar, Lutz or Land O’ Lakes, contact FMA, C.P.A. to schedule a free consultation.