2024 Florida Commercial Lease Tax Break

Good news for Florida real estate owners this year! Effective June 1, 2024, the Florida state sales tax (Section 212.031, Florida Statutes) for renting, leasing, letting, or granting a license to use real property (i.e. commercial leases) will be reduced from 4.5% to 2.0%. Commercial real estate properties such as office and retail spaces, logistics and industrial warehouses, self-storage units, and mini-warehouses/flex space all qualify for the savings.  However, the reduced state sales tax rate on commercial rentals does not apply to the state sales tax on rentals or leases of living, sleeping, or housekeeping accommodations for six months or less, parking or storage spaces for motor vehicles in parking lots or garages, docking or storage spaces for boats in boat docks or marinas, or tie-down or storage space for aircraft at airports.  

It is important to make sure you know the exact local sales surtax imposed by counties and municipalities where the real property is located. In the case of Marion County, FL, the commercial sales tax is 1%.  When you include both the state and local taxes, this brings the sales tax for leases on commercial properties in Marion County down from 5.5% to 3%!   

Here’s an example of what this means in real life:

Chris is renting a 10,000-square-foot (sf) building for $13.00sf per month for his manufacturing business. His rent cost at the end of each month is $10,833.33 per month (10,000 sf x $13.00 = $130,000. $130,000/12 months = $10,833.33 per month of rent). In the past, the per-month rent would have a 5.5% tax rate, equaling an additional $595.83 in expenses.  With the reduced rate down to three percent, Chris will now pay $324.99, saving $270.84.  That’s a 45% saving, which adds up to yearly savings of $3,250.08! 

Here’s an important reminder for those currently renting commercial space in Marion County, please read the following expert from the Florida Tax Information Publication: “Rental charges paid on or after Jun 1, 2024, for rental periods of December 1, 2023, through May 31, 2024, are subject to 4.5% state sales tax plus any applicable discretionary sales surtax. Rental payments made prior to Jun 1, 2024, that entitle the tenant to occupy the real property on or after Jun 1, 2024 are subject to 2.0% state sales tax plus any applicable discretionary sales surtax.” 

This is great news coming from Tallahassee and the team at SVN | McDonald believes it will help facilitate additional growth and expansion of businesses throughout the great state of Florida. 

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