Marvin Kirsner, Greenberg Traurig shareholder Marvin Kirsner, Greenberg Traurig shareholder

Florida has given a slight benefit to those who lease commercial property beginning in 2018: The state’s general 6 percent state level tax will be reduced to 5.8 percent for rental payments received on or after Jan. 1, for occupancy periods beginning on or after this date. However, there is no reduction in the local option surtax that many Florida counties impose.

Property owners should be aware of this reduction in state tax for lease payments related to periods starting this year. In addition, landlords and management companies sending out invoices for rental periods commencing on or after Jan. 1 should revise their invoice software to account for the 0.2 of a percent reduction in the state tax rate.


Florida is somewhat unique in taxing real property leases. The tax is imposed not only on the base rent, but also on any additional rent, or any consideration required to be paid by the tenant as a condition of occupancy. As a result, the tax is also due on the tenant’s share of common area maintenance charges, real property taxes, and most other charges required under the lease.

In addition to this 5.8 percent tax rate, a landlord must also collect the local option surtax imposed by many Florida counties, which generally varies between 0.5 percent and one percent (up to two percent for small counties). There is no reduction in the rate of this local tax. For example, beginning Jan. 1, 2018, lease payments in Miami-Dade County will be taxed at a rate of 6.8 percent, because Miami-Dade County imposes a local surtax at a one percent rate.

Although the new 5.8 percent state level tax rate is effective Jan. 1, 2018, this reduced tax rate is applicable to the lease period to which the rent relates. Accordingly, if a landlord receives rent payments in 2018 for December 2017 occupancy, the 6 percent state level rate would still apply (plus the applicable local surtax). On the other hand, if a tenant pays the rent for January 2018 in December 2017, the 5.8 percent rate would apply.


It is also important to remember that a lease of residential property is subject to the sales tax on transient rentals unless the rental is under a bona fide written lease for a period of longer than six months.

The rate of this tax on transient rentals will remain at 6 percent (plus local option surtax). Furthermore, a lease of residential real property which is taxable as a transient rental (because it does not satisfy the six-month bona fide written lease requirement) is also subject to local tourist development taxes. The rate on these local tourist development taxes varies from 5 percent to 7 percent for most major counties. There is no reduction in the tax rates of these local level tourist development taxes.

Furthermore, the reduction in the rate does not apply to charges for parking a motor vehicle, for docking a vessel, or for tying down or hangaring an aircraft.

No matter how the new sales tax rate reduction impacts a commercial real estate related business, it is important for those involved to take the time to address any changes that need to be made to accommodate it now—if this has not yet been done.

Marvin A. Kirsner is the administrative shareholder of Greenberg Traurig’s Boca Raton office, where his primary areas of practice deal with corporate, transactional and industry specific tax issues. He serves as the co-chair of the firm’s state and local tax  practice.