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At his State of the State address, Gov. Rick Scott once again promised to cut the state's tax on commercial leases, something he says is unique only to Florida.
"Florida is now the only state in the nation to tax commercial leases," Scott said March 7.
Florida does levy a 6 percent sales tax on the total rent paid for any commercial property, including storefronts, offices and warehouses. But is that the only state-level tax of its kind?
Scott’s team sent over an October 2015 report from Florida TaxWatch, a group that takes a critical look at state spending with an eye toward long-term savings. The report says that Florida "is the only state to impose a standard, statewide sales tax on commercial real estate leases."
It cites as evidence a Nov. 24, 2014, research memorandum from the Florida Legislature’s Office of Program Policy Analysis and Government Accountability, which is nonpartisan.
The OPPAGA memo concluded that Florida is the only state that imposes a sales tax on commercial real estate leases.
"In 45 states, there is either no sales and use tax or state law applies only to tangible personal property," it reads.
The OPPAGA report details a few other places with similar instances of limited taxation of commercial rents.
For example, New York City imposes a 6 percent tax on commercial real estate leases, but it only applies to companies that pay at least $250,000 in rent every year.
Hawaii imposes a 4 percent general excise tax on income, which can include income from rentals.
New Mexico has a gross receipts tax that varies from 5.125 percent to 8.9 percent depending on the location. Commercial rents are included in gross receipts but a deduction for those leases is allowed, effectively eliminating the tax, the report says.
And then there’s Arizona, which has no state tax on rent, but does have five cities that impose a particular tax on commercial real estate leases.
Still, those laws don’t change the fact Florida is still the only state with a specific sales tax on commercial leases, said Kurt Wenner, Florida TaxWatch vice president of research.
National experts at the Tax Policy Center said to the best of their knowledge Scott was correct. So did Carla Markowitz, an attorney who specializes in Florida commercial landlord representation speaking on behalf of the Building Owners and Managers Association, or BOMA.
In his second term, Scott promised to phase out commercial leases, and has made attempts to do so as far back as 2014.
Most recently, in his 2017-18 recommended budget, Scott proposed to reduce the tax on commercial leases by 25 percent, which his office says will cut off $454 million in the state sales tax levied on commercial leases.
Scott said that "Florida is now the only state in the nation to tax commercial leases."
Scott's claim is rooted in a research memo that said Florida is the only state to have a sales tax on commercial leases. The report noted that other states and municipalities have similar taxes, but none of them are comprehensive sales taxes like Florida’s.
We rate Scott’s statement True.
Email exchange with Lauren Schenone, Scott spokeswoman, Feb. 7, 2017
Interview, Jerry Donnini, a partner of the Florida based Law Offices of Moffa, Sutton, & Donnini, March 7, 2017.
Interview, Kurt Wenner, vice president of research, Florida TaxWatch, March 7
Email exchange, Norton Francis, senior research associate at the Tax Policy Center, Feb. 7
Email exchange, Cecily Millan, BOMA Association Executive (BAE), Feb. 8
Email exchange, Carla Markowitz, attorney at Law at Commercial Landlord Representation, March 8
Email exchange, Abigail Grenadier, staff assistant for The Real Estate Roundtable, March 8
Governor Rick Scott’s 2017-2018 Budget, "Fighting For Florida’s Future"
PolitiFact Florida, Scott-O-Meter: "Scott, lawmakers want to alter sales tax on commercial rents," Jan. 4, 2016.
Florida TaxWatch, "REDUCING THE BUSINESS RENT TAX," Oct. 2015.
Law Offices of Moffa, Sutton, & Donnini, P.A. "IS RENT SUBJECT TO FLORIDA SALES TAX?" Jan 26, 2015
Florida Department of Revenue, "Sales and Use Tax on Commercial Real Property Rentals."
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