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Florida Sales Tax on Commercial Rents Reduced

Martin A. Schwartz

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.  Furthermore, it will only be applicable to leases executed following such date.  The current rates will continue to apply to existing leases.

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