New Florida Commercial Rent Sales Tax
Starting on June 1st, 2024, the Florida state government will introduce a reduced tax rate that will be applicable to all new or renewed contracts for leases, rentals, or licenses on real property. This adjustment will take effect from the designated start date and remain in place moving forward. It is crucial for all stakeholders, including property owners, tenants, and real estate professionals, to be fully aware of this timeline. Understanding the specifics will enable them to take full advantage of the financial benefits that this policy change is set to offer, thereby optimizing their investment strategies and operational budgets considering the new tax structure.
Florida Department of Revenue Sales Tax Reduction
“State Sales Tax Rate Imposed on Rentals, Leases, or Licenses To Use Real Property Reduced to 2.0%
Effective June 1, 2024, the state sales tax rate imposed under section 212.031, Florida Statutes (F.S.), on the total rent charged for renting, leasing, letting, or granting a license to use real property (also known as “commercial rentals”) is reduced from 4.5% to 2.0%. Some examples of real property rentals subject to tax under s. 212.031, F.S., include rentals of commercial office or retail space, warehouses, and self-storage units or mini-warehouses. The total rent charged includes all consideration due and payable by the tenant for the privilege or right to use or occupy the real property. The local option discretionary sales surtax imposed by the county where the real property is located continues to apply to the total rent charged. Sales tax is due at the rate in effect during the time the tenant occupies or is entitled to occupy the real property, regardless of when the rent is paid.
- Rental charges paid on or after June 1, 2024, for rental periods of December 1, 2023, through May 31, 2024, are subject to 4.5% state sales tax plus any applicable discretionary sales surtax.
- Rental payments made prior to June 1, 2024, that entitle the tenant to occupy the real property on or after June 1, 2024, are subject to 2.0% state sales tax plus any applicable discretionary sales surtax.”
Calculating New Sales Tax Commercial Rent Payments Starting June 1, 2024.
Sales Tax= 2% + County Surtax
County Surtax Rates Table
Shown here are the Surtax Rates for each Florida county. The sales tax would then be 2% + the rate for where your property is located, times the monthly rental amount. For example, if your monthly rental amount is $2,000 for a property in Alachua County, the total tax rate would be 2% plus the 1.50% surtax rate, for a total tax rate of 3.5%. Thus, the formula would be:
$2000 x 3.5% = $70
We Can Help
Continual updates and information are the lifeblood of tax compliance in a dynamic landscape. We urge you to stay abreast of the latest amendments and interpretations to safeguard their interests.
Understanding the specifics of the reduced tax rate is crucial for getting a really good grasp of its consequences for both individuals and businesses. It is essential to carefully distinguish between the former and the current tax frameworks to effectively adjust financial strategies. Doing so with the tax reduction in mind will enable better financial forecasting and ensure that you can adapt to the new fiscal environment without undue stress. This thorough understanding will also facilitate a smoother transition across the board, ensuring that the benefits of the tax reduction are maximized.
Understanding the abridged 2.0% commercial property tax is the first step towards positioning yourself well in the market. However, mere knowledge without action is an opportunity lost. It’s time to immerse yourself in the changes in this tax reform and take appropriate action.
We are here to assist in any way possible. Please contact us and we will work with you in any way we can.
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