Florida’s Reduced Commercial Rental Sales Tax

The Florida Department of Revenue recently released Tax Information Publication (TIP) 24A01-02 which announced a reduction in the state sales tax on the “total rent charged for renting, leasing, or granting a license to use real property” from 4.5% to 2% as of June 1, 2024.  

The local county option tax rate, which typically varies between 0.5% and 1.5%, did not change.  Therefore, the combined state and county rate was reduced from between 5% and 6% to between 2.5% and 3.5%

The 2% state-level tax rate only applies to leases of commercial property, such as retail, office, warehouse, and industrial properties.  The tax rate on many short-term (six months or less) and other residential rentals (such as hotel or home rental stays) remains at 6% (plus the local sales tax and local tourist development tax).

The reduced rate is only applicable to rental periods commencing June 1, 2024. Accordingly, if a rent payment for May 2024 was received in June, the prior 4.5% state-level rate (plus local option county tax) would apply to the portion of the rent applicable to periods prior to June 1, 2024. On the other hand, lease payments for occupancy periods on or after June 1, 2024, would be subject to the new reduced 2% rate even if the rent was paid prior to June 1.