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Real Estate Related Taxes

Patrick W. Ryskamp

After the holidays, I have found there is nothing more exciting than taxes and tax season in general.  Everyone already has a good working knowledge about ad valorem and non-ad valorem property taxes.  I thought it would be interesting (or, in the alternative, sleep inducing) to summarize the other types of taxes that relate to real property in Florida.

Sales Tax.  If you rent property, then you are generally required under Florida law to register with the Florida Department of Revenue (the "Department") and collect and remit sales tax on the rental amount to the Department.  There are several exceptions, however,including if the property is residential property and is leased pursuant to a written agreement for a period longer than six months.  The sales tax rate for property located in Sarasota County is currently 7% and for property located in Manatee County is currently 6.5%.  Sales tax returns are generally due on a monthly basis, but may only need to be filed quarterly, semi-annually, or annually, depending upon the amount of tax collected.  

Tourist Development Tax.  If the property is residential property and you rent it for six months or less, the rental amount is generally subject to the Florida tourist development tax, which is currently imposed at 3% for property located in Sarasota County and 4% for property located in Manatee County.  This tax is imposed on the rental amount, and is in addition to the sales tax.  Like the sales tax, there are several exceptions, including rent from residential property that is leased pursuant to a written agreement for a period longer than six months.  However, unlike the sales tax which is remitted to the Department, for the tourist development tax, you must register with, and submit the tourist development tax to, theCounty Tax Collector where the property is located generally on a monthly basis.  Whether deliberate or otherwise, this is the most often missed tax.

Tangible Personal Property Tax.  There is an annual tax assessed on: (i) property used in the operation of a business; (ii) mobile home attachments when the land is rented; and (iii) furnishings and appliances used on rental property.  Household furniture and furnishings of a Florida resident are not subject to the Florida personal property tax.  With the exception of mobile home attachments, the tangible personal property assessment is typically based upon the tax return that has been completed by the property owner.  The return is filed between January and April of each year with the Property Appraiser for the county where the property is located.  Taxes are collected beginning in November.

Corporate Income Tax.  Corporations that have “nexus” with Florida(usually because they have property, employees or agents located inFlorida) are subject to a 5.5% corporate income tax on their Florida income, which generally includes rental income and income from the sale of real property.  Florida corporate income tax returns are due by April 1 for calendar-year taxpayers or the first day of the fourth month following the close of the fiscal year for fiscal-year taxpayers. Corporate taxpayers must make quarterly estimated payments of their Florida corporate income tax liability if they expect such annual tax liability to exceed $2,500.  In general, corporations qualifying as “S” corporations for federal income tax purposes are not liable for this tax.  Entities treated as partnerships or disregarded entities for federal income tax purposes are not liable for this tax.  A corporation otherwise subject to this tax that owns an interest in a partnership or disregarded entity will be liable for tax upon the income attributable to the partnership or disregarded entity.  Florida does not impose an income tax upon individuals.  

Additional information regarding these taxes can be obtained from the county where the property is located and the Department by either viewing their website at http://sun6.dms.state.fl.us/dor/ or by calling 1-800-352-3671.  Your accountant can assist you with filing any of these tax returns and any necessary registrations.
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