The State of Florida has imposed a sales tax on commercial rents since 1969. Currently, the tax is imposed at the rate of 6 percent in every county except Miami-Dade which fixes the rate at 7 percent by reason of an add-on at the county option. Florida is the only state in the United States to impose a sales tax on rents. There has been a movement to repeal this tax for several years, but it should be noted that Florida’s general revenue stream is very heavily reliant on sales tax in general. For the 2016-17 fiscal year, the sales tax accounted for 78.5 percent of all such revenue.
Perhaps with this reliance in mind, the Florida Legislature has been reluctant to eliminate this tax on commercial rents. In prior years, efforts to phase out the tax have stalled. This year, however, the Legislature in HB-7109, took a baby step forward by reducing the rate from 6 percent to 5.8 percent or a 3 1/3 percent reduction. In Miami-Dade County, the rate will fall from 7 percent to 6.8 percent.
Although the bill became part of Chapter 2017-36 on May 25, 2017, it will not be effective until January 1, 2018.
Note: This blog post has been modified to reflect the Department of Revenue’s Tax Information Publication No. 17A01-14 issued on November 13, 2017. The original post, prepared shortly after the change in statute was adopted in May 2017, indicated that leases effective prior to January 1, 2018 would continue to pay the sales tax at the unreduced rate. In TIP 17A01-14, the Department of Revenue indicated all payments for rental accruing after 1/1/18 would bear the lower rate.