Florida sales tax change on commercial rental property

The State of Florida has announced a reduction in the sales tax rate effective on January 1, 2018 pertaining to the rental of commercial real estate.  The present rate of 6 percent will drop down to 5.8 percent.  Any county discretionary sales taxes remain in effect and must be collected in addition to the 5.8 percent sales tax. 

For Marion County, there is presently in effect a 1 percent discretionary tax.  Marion County will see a drop from 7 percent down to 6.8 percent after allowing for the 1 percent discretionary tax.  In determining if you should use the 6 percent or 5.8 percent rate, go by the rate in effect during the time the tenant occupies the property and not when the rent is paid.  Rental payments made after January 1, 2018 for rental periods prior to January 1, 2018 should be at 6 percent.  Rental payments made before January 1, 2018 but are for rental periods after January 1, 2018 should be at 5.8 percent.  Also, keep in mind that the amount of the rent and the applicable sales tax must be separately restated.  You can’t just pay an amount and argue with the State that the sales tax has been included.  Sales tax must be separately stated.