NAIOP Lobbies to End Sales Tax on Florida Commercial Leases

The National Association for Industrial and Office Parks (NAIOP) has been lobbying to eliminate sales tax on Florida commercial leases. Currently, Florida remains the only state to charge sales tax on commercial leases which is applied not only to base rent, but also to any common area maintenance, property taxes, and other charges required under a lease as a condition of occupancy.

In an effort to help make Florida more competitive and attractive for businesses, NAIOP South Florida Chapter President, Darcie Lunsford, recently told Bisnow, “We’ve been cutting away at it for years because its kind of a regressive tax. It does sap money that could otherwise be used for investment.”

Lawmakers in the annual legislative session that ended this month agreed to roll back the current sales tax rate from 5.7% to 5.5% beginning January, 2020. Removing the tax altogether would be very difficult, however. Without state income tax, the state of Florida rely’s heavily on other ways to generate revenue including taxing commercial leases which has been in effect since 1969. According to an analysis prepared for the Florida Senate, this new bill reducing the sales tax rate which also includes two tax-free holidays will already cut $73 million from the state budget annually. Lunsford has also acknowledged that sales tax on commercial leases generates about $1 billion in revenue for the state of Florida each year.

According to Bisnow, NAIOP also supported legislation that prohibits a local government from collecting impact fees before issuance of a building permit except in the case of water and sewer connection. That new law is effective July 1.

Read more about it here.