If you do not understand the concept of Florida Commerical Rent, please read this article first:
It is common for real property to be leased and then subleased to tenants. A prime lease is a lease between a landlord and a broker, in which the broker intends to sublease the real property either in whole or in part to other businesses. The lease between the broker and the tenant is called a sublease. If you lease commercial real property that is subject to sales tax and then sublease a portion of it to another person, you must collect sales tax on the rent you receive. You can take credit on a pro-rated basis for the tax you paid to a landlord on the subleased portion. For example, if as a tenant you lease 200 square feet of floor space for $100, you owe $5.50 in sales tax to your landlord on the lease amount. ($100.00 original lease amount X 5.5% sales tax). You then decide to sublease half of your space (100 square feet) to another person for $100 plus $5.50 sales tax. ($300.00 sublease amount X 5.8% sales tax). If you paid the sales tax to your landlord for the 200 square feet, then you must also remit to the state only the amount of sales tax from the subleased portion that exceeds what you paid on the prime lease portion. To calculate this, look at the tax you paid to your landlord for the entire space ($5.50). Half of that (for half the square footage of the space) is $2.25. The tax you collected (5.50) exceeds the amount of tax you paid on the subleased portion ($2.25) by $2.25. You are required to remit $2.25 sales tax to the state as a dealer, as well as pay the tax of $5.50 to your landlord as a tenant.
If you sublet all the leased premises or retain only an insignificant portion of the real property, you may choose not to pay sales tax to your landlord if you register as a dealer and collect and remit all commercial rent tax due on the prime lease and sub-leases. You would then owe “use tax” on that portion of the property you retain for your own use. In this case, you must present a signed copy of your Annual Resale Certificate to your landlord. The amount you are responsible for remitting is the full $5.50 on the sub-lease plus $2.25 for the other half of the square footage for the prime lease.
If you have been collecting commercial rent and have not been remitting the correct amount of tax, you are liable for the tax due and may incur additional penalties and interest when audited. If you have been audited and are liable for commercial rent tax, we may be able to help you reduce your audit assessment and ensure all emptions are being applied. If you have not yet been audited but would like to remit tax due and avoid the risk of an audit, then a voluntary disclosure may be the option for you.
Authority
Florida Statute Sec 212.031 (Tax on rental or license fee for use of real property)
Additional Resources
Florida Department of Revenue Guide: Sales and Use Tax on Commercial Property Rental
Donovan Niles 