Business Commercial Rent and Surcharge Tax Updates Beginning January 2020
Commercial Rent
The state of Florida has issued a reduced sales tax rate on commercial rent beginning January 1, 2020. This reduction takes the commercial rent sales tax from 5.7% to 5.5% at the state level.
This new law will cause landlords to amend existing contracts/leases by January 1, 2020 in which those contracts/leases indicate a 5.7% commercial rent sales tax. However, if contracts/leases do not indicate the exact percentage rate, and only state that tenants will be charged applicable sales tax, an amendment may not be needed.
There are rules in place that prevent delaying rent payments to take advantage of the new lower rate. The tax rate applicable to a rent payment is based on the date the property is occupied, not when payment is due and/or paid.
Discretionary Sales Surtax
In addition to the regular 6% sales tax on services and 5.5% on commercial rent, businesses need to still plan for the Surtax charges that began on January 1, 2019. The surtax charge was new to Lee and Collier Counties and impacts businesses in those areas. Any business should review their POS systems and QuickBooks files to make sure they are implementing the proper tax amounts for their areas. Lee county businesses must include a .5% surtax charge and Collier county businesses will need to include a 1% surtax charge, on all services and rent.