If you are a business owner or a landlord in Florida, you may have heard of the Florida commercial rent sales tax. This is a unique tax that applies to the rental of commercial real estate in the state. Florida is one of the few states that impose such a tax, and it can have a significant impact on your bottom line. In this article, we will explain what the Florida commercial rent sales tax is, how it works, who has to pay it, and how to comply with it, so read on to learn what you need to know.
What is the Florida Commercial Rent Sales Tax?
The Florida commercial rent sales tax is a 5.5% state tax that is levied on the total rent or license fee charged for the use of commercial real estate in Florida. This includes any payments for the right to use real property as office space, retail space, warehouse space, parking lots, etc. The tax also applies to any payments for common area maintenance (CAM) charges, property taxes, insurance, and other expenses that are passed through to the tenant by the landlord.
The tax does not apply to residential rentals, such as apartments, condos, or single-family homes. It also does not apply to rentals of transient accommodations, such as hotels, motels, or bed and breakfasts. However, it does apply to rentals of mixed-use properties that have both residential and commercial components.
Who Has to Pay the Commercial Rent Sales Tax in Florida?
The commercial rent sales tax is paid by the tenant or licensee who occupies or uses the commercial real estate. However, the landlord or licensor is responsible for collecting and remitting the tax to the Florida Department of Revenue (DOR). The landlord or licensor must register with the DOR as a sales tax dealer and file monthly or quarterly returns reporting the amount of rent collected and tax due. The landlord or licensor must also provide a sales tax certificate to each tenant or licensee and keep records of all rental transactions for at least three years.
The tenant or licensee may be eligible for certain exemptions or deductions from the tax, depending on the nature and location of their business. For example, some exemptions apply to:
- Rentals of property used exclusively for religious, charitable, educational, or governmental purposes,
- Rentals of property used exclusively for public fairs or expositions,
- Rentals of property located in an enterprise zone or a brownfield area,
- Rentals of property used for agricultural purposes, and
- Rentals of property owned by a foreign government or an international organization.
Some deductions apply to:
- Rentals of property subject to ad valorem taxes,
- Rentals of property subject to municipal parking fees, and
- Rentals of property subject to local option surtaxes.
How to Comply with the Florida Commercial Rent Sales Tax
As a landlord or licensor of commercial real estate in Florida, you must follow these steps to comply with the commercial rent sales tax:
- Register with the DOR as a sales tax dealer and obtain a sales tax certificate.
- Collect a 5.5% sales tax from each tenant or licensee on the total rent or license fee charged each month.
- File monthly or quarterly returns with the DOR reporting the amount of rent collected and tax due.
- Remit the tax collected to the DOR by electronic funds transfer (EFT) or check.
- Provide a copy of your sales tax certificate to each tenant or licensee.
- Keep records of all of your rental transactions for at least three years.
As a tenant or licensee of commercial real estate in Florida, you must follow these steps to comply with the commercial rent sales tax:
- Pay a 5.5% sales tax to your landlord or licensor on the total rent or license fee charged each month.
- Obtain a copy of your landlord’s or licensor’s sales tax certificate.
- Keep records of all rental payments you make for at least three years.
- Claim any exemptions or deductions from the tax by providing a valid exemption certificate or other qualifying documentation to your landlord or licensor.
It is worth noting that there are some exceptions and special cases related to the commercial rent sales tax that can complicate compliance. For example, if a tenant subleases a portion of the commercial space they are renting, they may be responsible for collecting and remitting a portion of the commercial rent sales tax to the landlord. Additionally, if a tenant is exempt from the tax due to the nature of their business, they may still be responsible for paying certain taxes on other expenses related to the rental, such as utilities or maintenance.
Furthermore, the commercial rent sales tax regulations in Florida can change from year to year, and it is important for businesses and landlords to stay up-to-date with the latest developments and requirements. This can be challenging for busy entrepreneurs and property owners who may not have the time or resources to keep track of all the changes and updates.
Why Choose Quilca CPA Group?
The commercial rent sales tax is just one of many taxes and fees that businesses and landlords need to consider when operating in the Sunshine State. Florida has a complex tax system that includes sales tax, use tax, property tax, corporate income tax, and many other taxes and fees that can affect your bottom line.
If you are looking for a reliable and experienced accounting firm that can help you with your Florida commercial rent sales tax compliance and planning needs, look no further than Quilca CPA Group. We specialize in providing accounting and tax services to Florida businesses. We have extensive knowledge and experience in dealing with the commercial rent sales tax as well as all the other state and local taxes that affect your business. If you want to learn more about how we can help you with your Florida commercial rent sales tax issues and other accounting and tax needs, please contact us today. You can call us at (786) 310-5582 or email us at [email protected].
