Sales Tax on Rental Real Estate

Lessors of commercial and residential properties are liable to collect and remit Florida sales tax.  In addition, each county or municipality may assess their own tax on transient rental of residential properties.  The local tax may be called different name such as “Resort Tax” or “Tourist Development Tax” so something similar.  Bottom line, it is a tax on the rental of properties collected along side the state’s sales tax. Rental of commercial real estate, other than hotels and motels, is typically subject only to the state sales tax (including any local option sales surtax).

Transient rentals typically include hotels and motels but also includes any residential rental with a lease of six months or less.  If you are the owner of a property which you collect rent, you are obligated to register with the state and liable to collect and remit sales tax.  In addition, each county or municipality that assesses a transient rental tax has their own procedures for registering, collecting and remitting its tax.

Failure to collect and remit that tax can have very severe penalties.  The state is becoming very adept at identifying owners of rental properties who have not registered, nor remitted the tax.  If you need more information, please go to the link to the Department of Revenue we have included elsewhere on this site or feel free to contact us.

For 2018, the State lowered the sales tax rate on commercial rentals from 6% to 5.8%. The local optional sales surtax remains the same depending upon the locality.  Interestingly, the reduced rate does not apply to transient rentals as described previously. Why a .2% decrease in the tax?  Why not .5% or 1%?  I can only assume that was a number derived from a compromise and a test for the mathematically challenged.

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