by: Andrew Jackson, Esq ~ Jackson Law Group
Good news for Commercial Landlords, the reduction on state level sales taxes continues to decline.
Florida is reducing the state-level sales tax rate on commercial leases for occupancy periods beginning on or after January 1, 2020 down to 5.5%. However, counties are still imposing the local option surtax so be careful to check your county’s guidelines. The local option surtax varies between 0.5% to 1% for those counties that impose it. Currently, for 2019 St. Johns County has an additional 0.5% surtax.
Commercial property owners and management companies should be aware of this reduction for lease payments related to periods starting on or after 2020. It is recommended to adjust invoices for rental periods commencing on or after January 1, 2020 to account for the 0.2% reduction in the state tax rate.
Additionally, tax is not only levied on the base rent alone but also on any consideration required to be paid by the tenant as a condition of occupancy.
Payments for services and use of the property, such as charges for common areas, janitorial services, insurance, and other types of payments are consider rent and subject to tax, regardless of whether those payments are paid to the landlord directly or indirectly. For example, a commercial lease with a base rent of $1000 per month, and the tenant pays the insurance and mortgage directly to the bank of $600 per month, means that sales tax is charged on the total of $1600 and not just the $1000.
It is the responsibility of landlord to register with the department and collect and remit the proper amount of tax. Any agent who receives payments on behalf of a property owner must also register with the Department of Revenue.