Tax Rate on Commercial Property
Commercial real property is property that is used for business purposes and that is owned to produce income (spaces for offices, retail, etc.). Florida imposes a state sales tax on the lease of such property. Since 2018, the sales tax on commercial rent in Florida has consistently gone down, decreasing from 6% to 5.7% to 5.5% in 2020. The new state tax rate on leases of commercial real property has become effective in Florida on January 1, 2020. The tax rate has marked a decrease from 5.7% to 5.5%.
What is a Surtax Rate?
A surtax is a tax added on top of another tax. Most of Florida’s counties charge their own surtax on top of the state’s sales tax. New surtax rates usually become effective January 1st of each year and can be found on the website of the Florida Department of Revenue. Expiration dates of these surtax rates vary. Importantly, Florida law requires filing a tax return even if you do not owe any sales tax.
Counties’ Surtax Rates
It is worth noting that counties can impose an additional surtax that might range from 0% to 2.5% on top of the state tax. Some counties do not impose a surtax at all. The new state tax decrease will not impact different counties’ surtax rates. Therefore, when calculating the total tax rate on a commercial property, the sales surtax in each individual county must be taken into account. Currently, Miami-Dade, Broward and Palm Beach Counties’ surtax rate is 1%. The 1% should be added to the new state sales tax (5.5%) to achieve the new total tax rate in these counties.
It is estimated that the tax rate reduction will save around $64.5 million each year. Other parts of the new tax bill include sales tax exemptions for disaster preparedness supplies and tax reductions of license fees for the use of real property, among others.