Effective January 1, 2019, the Florida state sales tax rate applicable to the lease of commercial real property will decrease from the rate of 5.8% down to 5.7%. This change will directly impact leases of office space, retail space, and warehouse space, among others.
The decrease only applies to the state sales tax rate and does not impact county surtax rates. Therefore, the county surtax rate of the county where the rental property is located must be added to the state sales tax rate to obtain the applicable combined rate. For example, effective January 1, 2019, the lease of office space in Miami-Dade County is subject to sales tax at the combined rate of 6.7% (5.7% state sales tax + 1% Miami-Dade County surtax).
Nine counties (including Broward County) have surtax increases taking effect January 1, 2019.
Broward County enacted a 1% county surtax effective in 2019, making the combined rate of sales tax on the lease of commercial real property in the county 6.7% (5.7% state sales tax + 1% Broward County surtax). The new surtax will also increase the county’s general sales tax rate to 7% (6% state sales tax + 1% Broward County surtax). This 7% rate will apply to sales of general merchandise, leases of tangible personal property, sales of admissions, leases of transient accommodations (plus county occupancy taxes), and other sales transactions subject to state sales tax.
Effective January 1, 2019, the combined state and local sales tax rate applicable to the lease of commercial real property in each county will be as shown in the chart below.
Keep in mind that rent amounts paid prior to January 1, 2019, covering occupancy periods within the year 2019 will qualify for the 5.7% state sales tax rate.
Contact me or another member of Kaufman Rossin’s state and local tax practice with any questions. We can help you understand how new and existing tax provisions may impact your business and your assets.