Andrew Jackson LL.M. Jackson Law Group
Florida Legislature Reduces Sales Tax on Commercial Leases Beginning in 2019
Florida imposes sales tax on rental payments for the lease of commercial real estate. The 6% stateleveltax was reduced to 5.8% for 2018. The Florida legislature passed another law to furtherreduce the state-level rate to 5.7% for occupancy periods beginning on or after January 1, 2019.
There is no reduction in the local option surtax that many Florida counties impose in addition tothe 5.7% rate. The local option surtax varies between 0.5% to 1% for those counties that imposeit. In St. Johns County for example, the surtax is an additional 0.5%.
Commercial property owners and management companies should be aware of this reduction forlease payments related to periods starting next year in 2019. It is recommended to adjust invoices
for rental periods commencing on or after January 1, 2019 to account for the 0.1% reduction in thestate tax rate.
It is also important to remember that a lease of residential property is subject to the sales tax ontransient rentals unless the rental is under a bona fide written lease for a period of longer than six
months. The rate of this tax on transient rentals will remain at 6% (plus local option surtax).
Furthermore, a lease of residential real property that is taxable as a transient rental (because it does not satisfy the six-month bona fide written lease requirement) is also subject to local touristdevelopment
taxes. The rate on these local tourist-development taxes varies from 5% to 7% for most major counties. There is no reduction in the tax rates of these local tourist-development taxes.
Andrew Jackson is the managing partner at Jackson Law Group, a firm with over a ten-year history in St. Augustine. The firm focuses in practice areas such as tax, real estate, business, estate planning, and community associations. He received his law degree from Florida Coastal School of Law and Master of Laws (LL.M.) in Taxation from University of Florida.