Effective January 1, 2018, the Florida state sales rate applicable to the lease of commercial real property will decrease from the present rate of 6% to 5.8%. The decrease only applies to the state sales tax rate and does not impact county surtax rates. Therefore, the full rate of county surtax imposed by the county where the rental property is located still applies, in addition to the reduced state sales tax rate.
Accordingly, the county surtax rate must be added to the state sales tax rate to determine the combined rate of state and local sales tax that lessors should charge lessees on lease/rent payments.
The surtax rates in the South Florida’s counties are:
- Monroe County: Imposes surtax at the rate of 1.5%
- Miami-Dade County: Imposes surtax at the rate of 1%
- Palm Beach County: Imposes surtax at the rate of 1%
*Broward and Collier Counties do not impose surtaxes
Therefore, effective January 1, 2018, the combined state and local sales tax rate applicable to the lease of commercial real property in each county will be:
- Monroe County: 7.3%
- Miami-Dade County: 6.8%
- Palm Beach County: 6.8%
- Broward County: 5.8%
- Collier County: 5.8%
There is no cap on county surtax applicable to the lease of commercial real property. The cap limiting application of the surtax to the first $5,000 of a sale or lease transaction is limited to the sale or lease of tangible personal property. Therefore, the cap does not apply to the lease of commercial real property, and the full amount of each rent payment is subject to county surtax and state sales tax.
Contact me or a member of Kaufman Rossin’s state and local tax practice with any questions. We can help you understand upcoming and existing tax provisions and their impact on your assets.