admin / November 15, 2017
After years of scrutiny, the Florida legislature has finally taken the first step in eliminating the sales tax on commercial rent. The state has imposed this sales tax on commercial rentals since 1969 and is the only state in the United States to impose such a tax. Over the years, critics have argued that the Florida-exclusive tax is a hindrance to economic growth and discourages new businesses from relocating to Florida. In opposition to this argument though, Florida’s major source of revenue generation comes from sales taxes — last year making up 78.5 percent — which has led to the reluctance to do away with the commercial rent tax. But, in July the Florida legislature voted to finally reduce the sales tax on commercial rent and the news was made official with a Tax Information Publication (TIP) release this past week. The tax will be reduced from 6 percent to 5.8 percent on January 1st of next year (2018) for most of Florida’s counties. Counties that chose to add an additional percentage point, such as Hillsborough and Pinellas, will go from 7 percent to 6.8 percent in January.
But before you go out trying to get a tax reduction on your rent by delaying rent payments until after the new year you should know that the bill includes a clause to prevent that. The bill specifically states that the tax rate applicable to rent payment is based on occupancy of the space, not when payment is due or paid. So in other words, all newly occupied leased spaces will enjoy a lower tax rate starting in 2018! Learn more about lease rates and office spaces for your business by visiting TampaBayTenantRep.com.
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