Governor Scott Calling for Phase-Out of Tax on Commercial Rents
Florida Governor Rick Scott called for beginning a phase-out of sales tax on commercial rents in fiscal year 2014—2015. A general announcement, but no specifics of the phase-out, was provided in a FAQ statement issued by the Governor’s office on January 28, 2014 (http://www.flgov.com/wp-content/uploads/2014/01/FAQ.pdf). Florida generally imposes sales tax on rent payments (including constructive rent payments) for commercial property, and the tax is imposed even where the landlord and tenant are related parties. This tax causes an unwelcome surprise to many taxpayers undergoing an audit by the Florida Department of Revenue.
However, in certain situations, there are techniques and restructuring options that can be used to minimize or even eliminate sales tax where related parties own and use the commercial property. Please contact us if you have questions regarding these techniques and options or any other sales tax issues.