Ladies and gentlemen – drumroll please – Florida has officially signed into law the REPEAL OF FLORIDA’S SALES TAX ON COMMERICAL RENT!!!! (I’m doing a little dance here). Effective October 1, 2025, Florida will 100% repeal the sales tax on commercial rent AND repeal Florida counties’ ability to impose a local surtax on commercial rent. The effort to repeal the rent tax has been ongoing since 2016, slowly but surely lowering the rate. This year, all those years of effort have finally come to fruition. There will be no more sales tax on commercial rent!
If you are a business owner, I know you are jumping for joy. But some people might ask why would Florida give up a large revenue source that has been around since 1969. There are several reasons. Florida has been the only state in the nation to have a sales tax on commercial rent. Sure, there are a few cities that charge such a tax, but no other state. So, Florida has been at a competitive disadvantage when it comes to attracting large businesses to relocate to Florida. There is also the issue of just how many struggling small businesses barely making a profit having to also bear the burden of sales tax on the rent they pay. Now they have one less expense and have a better chance to become successful and create more jobs. Finally, the sales tax on commercial rent has been a long time evil way for the Department of Revenue to tax unsuspecting business owners in ways they couldn’t imagine, such as:
- Many small businesses that also own the building they are in and pay the mortgage or property taxes for the property from the operating entity, incurring a surprise sales tax for rent on the payments.
- Nail salons, barber shops, tattoo parlors, hair salons, and masseuses have all been accused of receiving rent for paying their independent contractors a commission as a percentage of the revenue paid to the business from each customer.
- Larger landlords that pass on their expenses in the form of CAM (Capital Asset Management) charges have been floored when they find out these charges have been taxed as rent even though the same charges are often already subject to sales tax (such as security services, pest control services, and cleaning services).
several words oF caution for anyone celebrating this victory
- You can’t play games with when you pay your rent to avoid paying the sales tax. That means, you can’t avoid the tax just because you wait to pay September’s rent until October. In other words, the sales tax will apply to rent paid for occupancy prior to October 1st.
- The sales tax on storage fees and boat dockage fees still apply because both of those taxes were imposed by taxing statutes completely separate from the tax on commercial rent.
If you have any questions about the repeal of the sales tax on commercial rent, then please don’t hesitate to reach out.
About the Author: James Sutton is a Florida licensed CPA and attorney as well as a shareholder in Moffa, Sutton, & Donnini, PA. Mr. Sutton is charge of the Tampa office of the firm and practices almost exclusively in the area of Florida Sales & Use Tax Controversy. Mr. Sutton handles audits, protest, litigation, criminal cases, revocations, collections, and consulting engagements all in the area of sales tax. Mr. Sutton is an active member in the FICPA, AICPA, AAA-CPA, and FIADA. Mr. Sutton has been the State and Local Tax Chairman for the AAA-CPA, past president of the Florida AAA-CPA, and the Chairman for the State Tax Committee for the FICPA. Otherwise, you can learn more about Mr. Sutton in his firm bio HERE and you call him directly at 813-775-2131 or email JamesSutton@FloridaSalesTax.com
About the Firm: At the Law Office of Moffa, Sutton, & Donnini, PA, our primary practice area is Florida taxes, with a very heavy emphasis in Florida sales and use tax. We have defended Florida businesses against the Florida Department of Revenue since 1991 and have over 100 years of cumulative sales tax experience within our firm. Our partners are both CPAs/Accountants and Attorneys, so we understand both the accounting side of the situation as well as the legal side. We even have former sales tax auditors on staff. We represent taxpayers and business owners from the entire state of Florida. Contact us for a FREE INITIAL CONSULTATION to confidentially discuss how we can help put this nightmare behind you.
ADDITIONAL RESOURCES
FL SALES TAX AUDIT – FROM AUDIT NOTICE (DR-840) TO NOPA, published September 17, 2023, by Matthew Parker, Esq.
FLORIDA SALES TAX AUDIT HELP, published January 8, 2025, by James H. Sutton, CPA, Esq.
FLORIDA SALES TAX AUDITS PROCESS AND TRAPS, published March 4, 2023, by David Brennan, Esq.
DON’T HIRE AN IRS ATTORNEY FOR SALES TAX PROBLEMS!, published July 17, 2024, by James Sutton, CPA, Esq.
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