Florida Tax Law Firm

Contact Us
888.444.9568

We Offer a Free Case Evaluation

My Company is Under Florida Tax Audit
My Client is Under Florida Tax Audit
Florida Bank Account Has Been Frozen
Florida DOR is Just Being Unreasonable
How to challenge a FL tax assesment
Click here for Rules and Statutes Click here for Rules and Statutes
Florida Tax Law Lawyer Firm Overview Attorney Profile Practice Areas Resources Blog Contact Us
NAME:
EMAIL:
PHONE:
Select One:
MESSAGE:
Florida Tax Law
Why Hire the Law Offices of Moffa, Sutton, & Donnini, P.A.?
Florida Sales Tax Audit Defense
Florida Tax Audit
Florida Tax Litigation
Florida Tax Warrant / Lien
IRS Problems
For Attorneys
Criminal Sales Tax Defense
For Business Owners
For CPAs
Have A FL Tax Warrant?
Reverse Tax Audit
Selling / Buying a Business
State Tax Planning / Consulting
Types of FL Taxes
Your Business Under FL Tax Audit?
Your Client Under FL Tax Audit
Proudly Serving
Resources


100 West Cypress Creek Road, Suite 930

Fort Lauderdale, FL 33309

Office (954) 761-3700

Fax (954) 761-1004

8875 Hidden river PKWY, Suite 230

Tampa, FL 33637

Office (813) 775-2131

Fax (866) 388-3029

3500 Financial Plaza, Suite 330

Tallahassee, FL 32312

Office (850) 250-3830

Fax (866) 388-3029


2017 New FL Sales Tax Exemption for New Construction

As of July 1, 2017, Florida has a sales and use tax emption for the purchase of building materials, pest control services, and the rental of tangible personal property used in new construction in rural areas of opportunity.

Florida sales tax has some tricky technicalities, and certain industries get blindsided by these impositions of tax that are otherwise inconsistent with taxpayers’ common understanding of sales tax rules. For example, most taxpayers understand that items purchased by a business for resale are exempt. What they don’t always realize though, is that building materials purchased to be a part of a real property improvement or installation are subject to use tax because the contractor uses the materials in the performance of their real property contracts. Similarly, most taxpayers think services are not taxable in Florida. For the most part, that’s true. However, Florida does tax 4 types of services, such as pest control services.

Fortunately, Florida has eliminated this problem – albeit for only specific taxpayers. An important element of the exemption is that it is only for new construction in rural areas of opportunity. What is a rural area of opportunity? Accordingly to section 288.0656, Florida Statutes, a rural area of opportunity is:

“a rural community or a region comprised of rural communities, designated by the Governor, that has been adversely affected by an extraordinary economic event, a natural disaster, or severe or chronic distress.”

That sure weeds a lot of contractors out! Furthermore, the new statute defines in section 212.08(5)(r), defines “new construction” quite narrowly to mean “improvements to real property which did not previously exist. The term does not include the reconstruction, renovation, restoration, rehabilitation, modification, alteration, or expansion of buildings already located on the parcel on which the new construction is built.” But as we are still in hurricane season here in Florida, it is anyone’s guess to what extent this will save taxpayers money this year.

For the full statute, see below:

212.08(5)(r) Building materials, the rental of tangible personal property, and pest control services used in new construction located in a rural area of opportunity.—

1. As used in this paragraph, the term:

a. “Building materials” means tangible personal property that becomes a component part of improvements to real property.

b. “Exempt goods and services” means building materials, the rental of tangible personal property, and pest control services used in new construction.

c. “New construction” means improvements to real property which did not previously exist. The term does not include the reconstruction, renovation, restoration, rehabilitation, modification, alteration, or expansion of buildings already located on the parcel on which the new construction is built.

d. “Pest control” has the same meaning as in s. 482.021.

e. “Real property” has the same meaning as provided in s. 192.001, but does not include a condominium parcel or condominium property as defined in s. 718.103.

f. “Substantially completed” has the same meaning as in s. 192.042(1).

2. Building materials, the rental of tangible personal property, and pest control services used in new construction located in a rural area of opportunity, as designated by the Governor pursuant to s. 288.0656, are exempt from the tax imposed by this chapter if an owner, lessee, or lessor can demonstrate to the satisfaction of the department that the requirements of this paragraph have been met. Except as provided in subparagraph 3., this exemption inures to the owner, lessee, or lessor at the time the new construction occurs, but only through a refund of previously paid taxes. To receive a refund pursuant to this paragraph, the owner, lessee, or lessor of the new construction must file an application under oath with the Department of Economic Opportunity. The application must include all of the following:

a. The name and address of the person claiming the refund.

b. An address and assessment roll parcel number of the real property that was improved by the new construction for which a refund of previously paid taxes is being sought.

c. A description of the new construction.

d. A copy of a valid building permit issued by the county or municipal building department for the new construction.

e. A sworn statement, under penalty of perjury, from the general contractor licensed in this state with whom the applicant contracted to build the new construction, which specifies the exempt goods and services, the actual cost of the exempt goods and services, and the amount of sales tax paid in this state on the exempt goods and services, and which states that the improvement to the real property was new construction. If a general contractor was not used, the applicant shall make the sworn statement required by this sub-subparagraph. Copies of the invoices evidencing the actual cost of the exempt goods and services and the amount of sales tax paid on such goods and services must be attached to the sworn statement provided by the general contractor or by the applicant. If copies of such invoices are not attached, the cost of the exempt goods and services is deemed to be an amount equal to 40 percent of the increase in assessed value of the property for ad valorem tax purposes.

f. A certification by the local building code inspector that the new construction is substantially completed and is new construction.

3. The exemption under this paragraph inures to a municipality, county, other governmental unit or agency, or nonprofit community-based organization through a refund of previously paid taxes if the exempt goods and services are paid for from the funds of a community development block grant, the State Housing Initiatives Partnership Program, or a similar grant or loan program. To receive a refund, a municipality, county, other governmental unit or agency, or nonprofit community-based organization must file an application that includes the same information required under subparagraph 2. In addition, the application must include a sworn statement signed by the chief executive officer of the municipality, county, other governmental unit or agency, or nonprofit community-based organization seeking a refund which states that the exempt goods and services for which a refund is sought were funded by a community development block grant, the State Housing Initiatives Partnership Program, or a similar grant or loan program.

4. Within 10 working days after receiving an application, the Department of Economic Opportunity shall review the application to determine whether it contains all of the information required by subparagraph 2. Or subparagraph 3., as appropriate, and meets the criteria set out in this paragraph. The Department of Economic Opportunity shall certify all applications that contain the required information and are eligible to receive a refund. The certification must be in writing and a copy must be transmitted by the Department of Economic Opportunity to the executive director of the department. The applicant is responsible for forwarding a certified application to the department within the period specified in subparagraph 5.

5. An application for a refund must be submitted to the department within 6 months after the new construction is deemed to be substantially completed by the local building code inspector or by November 1 after the improved property is first subject to assessment.

6. Only one exemption through a refund of previously paid taxes for the new construction may be claimed for any single parcel of property unless there is a change in ownership, a new lessor, or a new lessee of the real property. A refund may not be granted unless the amount to be refunded exceeds $500. A refund may not exceed the lesser of 97.5 percent of the Florida sales or use tax paid on the cost of the exempt goods and services as determined pursuant to sub-subparagraph 2.e. or $10,000. The department shall issue a refund within 30 days after it formally approves a refund application.

7. The department shall deduct 10 percent of each refund amount granted under this paragraph from the amount transferred into the Local Government Half-cent Sales Tax Clearing Trust Fund pursuant to s. 212.20 for the county area in which the new construction is located and shall transfer that amount to the General Revenue Fund.

8. The department may adopt rules governing the manner and format of refund applications and may establish guidelines as to the requisites for an affirmative showing of qualification for exemption under this paragraph.

9. This exemption does not apply to improvements for which construction began before July 1, 2017.

Florida Sales Tax Attorney; Florida Sales Tax Audit; Florida Sales Tax Exemption; 2017 Florida Sales Tax Legislation

Jeanette Moffa is an associate attorney of the Law Offices of Moffa, Sutton, & Donnini, P.A. Ms. Moffa concentrates in the area of State and Local Taxation with a heavy emphasis on sales and use tax. In addition to Florida and multi-state sales and use tax issues, she also works on appellate administrative law cases. When she is not practicing law, she teaches English as an adjunct professor at Broward College. You can read more about Jeanette at her bio here.

ADDITIONAL RESOURCES

What Services Are Subject to Sales Tax In Florida, published May 1, 2012, by James Sutton, CPA, Esq.

FLORIDA TAX EXEMPT ENTITIES – SALES AND USE TAX HELP, published April 13, 2014, by Jerry Donnini, Esq.

Florida FINALLY Reduces the Sales Tax on Commercial Rent, published July 1, 2017, by James Sutton, CPA, Esq.

FL COUNTER-TOP COMPANIES: FL SALES TAX PROBLEMS, published October 13, 2013, by James Sutton, CPA, Esq & Gerald Donnini, Esq.

(c) Copyright 2017 - Moffa, Sutton, & Donnini, PA

Social Media