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Common Question About Rent Tax Reduction

We have had a number of questions regarding the reduction of rent tax in the State of Florida. There is confusion regarding which leases are subject to the new rates on January 1, 2018.

Brief Background on Rent Tax

Florida has been the only state in the United State to charge tax on rents. The commercial real estate industry has been lobbying for change with because of the extra financial burden to business owners. It has also played a factor in attracting corporations to the State.  

While the rent tax was not removed in its entirety, the real estate industry considered a reduction in taxes as substantial progress. The rate is down from 6 percent to 5.8 percent, or a 3 1/3 percent reduction.

So where is the confusion?

There are blogs that are reported that the tax reduction will only impact leases signed after January 2018. That information is outdated.

According to Martin A. Schwartz, a partner at Bilzin Sumberg specializing in real estate, that "information was based on interpretation of the statute."

Schwartz further explained, "The Department of Revenue issued a ruling that the change in the tax applied to payments after January 1st whether the lease was executed prior to or after January 1st." 

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