Additional Payments For Real Property Lease Taxable in Florida

Rentals of commercial real property are subject to sales & use tax. A lessee’s payments to a lessor that were in addition to the rental payments were subject to Florida sales tax. The lessee’s additional payments were to cover property taxes and related assessments. The lessor did not charge, collect, or remit sales tax to the state on the additional payments. The lessor was audited and the state assessed sales tax on the additional payments made by the lessee. Generally, a total rental payment is taxable, including all considerations due and payable by a tenant for the right to use or occupy real property for any purpose, specifically including ad valorem taxes. The additional payments were regarded as payments for the right to occupy and use the leased premises and were, therefore, taxable as a part of the total rental consideration. (Technical Assistance Advisement, No. 16A-008, Florida Department of Revenue, June 24, 2016, released August 2016)

Posted on May 24, 2017