It’s The Law
By: Fredrica Cosper

You know that you may owe Sales Tax on your Commercial Building or place where you operate your Business, if the tenant, your corporation, is paying your mortgage.

Does your corporation or artificial entity use a space that belongs to you, the individual owner of the property?  If you personally own property that your business uses whether LLC, Corporation, or LP and this artificial entity pays your mortgage payment or your property taxes or any other consideration, this is what the State of Florida calls commercial rent.

Let’s look at the Rule 12A-1.070:

       (4)(a) The tenant or person actually occupying, using, or entitled to use any real property from which rental or license fee is subject to taxation under Section 212.031, F.S., shall pay the tax to his immediate landlord or other person granting the right to such tenant or person to occupy or use such real property.

 (c) Ad valorem taxes paid by the tenant or other person actually occupying, using, or entitled to use any real property to the lessor or any other person on behalf of the lessor, including transactions between affiliated entities, are taxable.

 And let’s not forget the Common area maintenance fee that is charge to the tenant.  This, too, is taxed and the rate of 6% plus any discretionary tax on the entire amount.

 (d) Common area maintenance charges paid by a tenant to the lessor for the privilege or right to use or occupy real property are taxable.

 If your utility charges are shared and the landlord bills for them, these are subject to the sales tax, unless:

 (e) Utility charges paid by a tenant to the lessor for the privilege or right to use or occupy real property are taxable, unless the lessor has paid the sales tax to the utility company on such utilities consumed by the tenant, and the utilities billed by the lessor to the tenant are separately stated on the lessor’s invoice to the tenant at the same or lower price as that billed by the utility company to the lessor.

 If you are not registered and collecting sales tax, be aware that the Florida Department of Revenue may send you a letter inquiring about your Commercial Property.

Fredrica Cosper, Consultant -  Specialty:  Florida State Taxes.  Service Area: Lee, County, Collier, Glades, and Hendry Counties

Fredrica Cosper
Consultant: Florida State Taxes
Email: fcosper@fgcu.edu