Effective June 1, 2024, the State of Florida’s sales tax rate on commercial real property lease payments (including base rent and additional rent) will be reduced from 4.5% to 2.0% for payments received for occupancy periods beginning on or after June 1, 2024. Examples of taxable commercial real property rentals include commercial office, retail space, warehouses, and self-storage units.
Applicability of the New Sales Tax Rate
The new sales tax rate will be applicable to all payments of rent attributable to the period beginning on or after June 1, 2024, even if such amounts are prepaid prior to that time. For example, a Florida commercial tenant prepaying July 2024 rent in May 2024 will pay tax on such rent at the new reduced sales tax rate of 2.0%. Conversely, rent due in January 2024 will be subject to the 4.5% rate even if paid in July 2024.
Impact on Commercial Landlords and Tenants
Commercial landlords and management companies sending invoices for occupancy periods beginning on or after June 1, 2024, should update their records to account for the sales tax rate reduction.
Local Discretionary Sales Surtax
Note that the sales tax reduction does not affect the local discretionary sales surtax imposed by many Florida counties. The new combined sales tax and discretionary sales surtax rate for certain Florida counties beginning on June 1, 2024, are listed below:
Reminder on Florida Sales Tax
Florida sales tax on commercial rent only applies to amounts paid as rent by commercial tenants. Sales of tangible personal property and certain services provided by commercial landlords to their tenants are subject to Florida’s 6.0% sale tax, which is not impacted by this rate reduction.
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