How did Florida allocate taxable rent between exempt guest areas and taxable hotel-use areas under a ground lease and operating lease?

Plain-English summary

A hotel property had two layers of leasing. A ground owner leased the land and first-floor interests to an assignee, and the assignee then leased the land, hotel, convention center, fixtures, equipment, furniture, and furnishings to the hotel operator. Rent under both leases was tied to hotel revenue.

Florida treated the property as mixed-use real estate and accepted square footage as a reasonable way to divide taxable from exempt rent. The Department did not verify the taxpayer's measurements; it ruled on the allocation method and the figures presented.

For the ground lease, the proposed taxable numerator was 83,641 square feet and the total leased area was 1,374,318 square feet, producing a 6.086% taxable share. But because the assignee re-leased the entire ground-lease interest and retained no use, it could instead give the ground owner a valid Florida resale certificate. If it did so, no tax was due on the ground lease. If it did not, 6.086% of the ground rent was taxable, with a credit available for tax paid on space re-leased under the operating lease.

For the operating lease, the taxable numerator was 113,891 square feet and the denominator—land plus all hotel floors—was 1,948,322 square feet. The Department accepted 5.8456% of the operator's rental consideration as taxable.

The calculation excluded guest rooms and common areas principally provided to hotel guests without an additional charge, including the identified recreational and circulation spaces. It also excluded properly subleased areas whose third-party rent was taxed, so the same space would not be taxed twice. The ruling warned, however, that the sublease progression could not reduce the state's tax: if an area was not subleased during a rental period, or the tax on its subrent was too low, tax could again be due on the corresponding master-lease amount.

What this means for you

Mixed-use rent needs a reasonable allocation

The ruling did not impose one universal hotel formula. It says the Department must make a case-by-case determination, and square footage was reasonable for this property.

The numerator is based on how each area is used

Hotel operational space used exclusively by the lessee entered the taxable numerator. Guest rooms and qualifying common areas supplied to guests without extra charge were excluded under the dwelling-unit and mixed-use rules.

Sublease tax should not be pyramided—or eliminated

An area already taxed through a third-party sublease can be excluded from the prime-lease numerator. But the total tax cannot be reduced merely by stacking leases, so the tax paid on the sublease must adequately cover that area for the relevant rental period.

A resale certificate can remove tax from the prime lease

Because the assignee re-leased all of its ground-lease interest, it could elect not to pay tax to the ground owner by providing a valid resale certificate and then handling the tax on the downstream operating lease.

This is a 2009 real-property-rent ruling

The percentages, tax structure, and cited law reflect the facts and law addressed in 2009. Confirm the current treatment of Florida real-property leases before applying the methodology today.

Common questions

Q: What percentage of the ground lease was taxable?
A: Based on the supplied measurements, 6.086% if the assignee did not provide a resale certificate. With a valid certificate covering its complete re-lease, no tax was due on the prime ground lease.

Q: What percentage of the operating lease was taxable?
A: The Department accepted 5.8456%, calculated as 113,891 taxable square feet divided by 1,948,322 total square feet.

Q: Were guest rooms included in taxable square footage?
A: No. Guest rooms and common areas principally provided to guests without an additional charge were treated as exempt in the allocation.

Q: How were shops, meeting spaces, and other subleased areas handled?
A: Properly taxed third-party subleases were excluded to avoid taxing the same space twice, subject to the rule that the progression of leases could not reduce the total tax due.

Citations and references

• Fla. Stat. § 212.031(1)(a)-(c) (real-property lease tax, dwelling-unit exclusion, and mixed-use allocation)
• Fla. Stat. § 212.031(2)(b) (no tax pyramiding or reduction through successive leases)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)
• Fla. Admin. Code r. 12A-1.070(8) (credit for tax paid on subleased space)
• Fla. Admin. Code r. 12A-1.070(9) (complete sublease and resale-certificate election)
• Fla. Admin. Code r. 12A-1.070(14)(a) (Department allocation for mixed-use real property)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 09A-009

Original ruling text

SUMMARY
QUESTION:
What portion of the Taxpayer’s rent payments will be subject to sales tax under section
212.031, Florida Statutes?
ANSWER:
Section 212.031(1)(b), F.S., and Rule 12A-1.070(14)(a), F.A.C., provide that the
Department shall identify those portions of “rent” that are taxable and those that are taxexempt. In reaching this determination, the Department must develop a case-by-case
approach that is reasonable. There are several approaches that may be used to reach a
reasonable determination. Which approach is most reasonable is a decision that must be
made depending on the facts and circumstances of the individual taxpayer.
Under the facts provided in this request, the taxable portion was determined by dividing
the total square footage of the premises that is used exclusively by the Lessee for its hotel
related purposes, plus any other square footage used by the Lessee that is not guest rooms
or common areas principally provided for use of the guests, and for which either, (a) the
Lessee does not impose a charge for the use of such areas; or (b) the Lessee imposes a
separate charge for the use of an area and that charge is subject to tax under a provision
of Chapter 212, F.S., other than Section 212.031, F.S. (the numerator), by the entire
leased space (the denominator).
February 19, 2009

XXX

Re:

Technical Assistance Advisement 09A-009
Taxable Portions of a Hotel Lease
Sales and Use Tax
Section 212.031, Florida Statutes (F.S.)

Technical Assistance Advisement
Page 2 of 13

Rule 12A-1.070, Florida Administrative Code (F.A.C.)
XXX

XXX:
This is in response to your letter dated January 19, 2009, requesting this Department’s
issuance of a Technical Assistance Advisement (TAA) pursuant to section 213.22, F.S.,
and Rule Chapter 12-11, F.A.C., regarding the above referenced matter and parties. An
examination of your letter has established that you have complied with the statutory and
regulatory requirements for issuance of a TAA. Therefore, the Department is hereby
granting your request for a TAA.
ISSUE
What portion of the rent payments will be subject to sales tax under section 212.031,
Florida Statutes? And which entities are required to be registered with the State of
Florida for sales tax?

FACTS
Your letter dated January 19, 2009, provides in part:
FACTS – GROUND LEASE
For historical reference, the Original Ground Lease dated XXX1983 between
XXX [“Original Ground Owner”], and [Original Ground Lessee], leases the land
located . . . [in] Florida, to [Original Ground Lessee], upon which [Original
Ground Lessee] would construct and operate a hotel. Lease term is 50 years, and
includes an option to extend another 50 years. Construction of the hotel was
completed in XXX, and a convention center was subsequently built adjacent to the
hotel in XXX. Ownership of and title to the hotel and all FF&E belongs with
[Original Ground Lessee]; they alone are entitled to claim depreciation on the
hotel and all FF&E. No rent was payable on the Ground Lease until the hotel
opened. Rent is due quarterly and is based on percentages of sales from hotel
operations. [Original Ground Lessee] is also responsible for paying ad valorem
taxes on the land.
On XXX 2005, [Original Ground Lessee] assigned this Ground Lease to
[Assignee].
The . . . County Property Appraiser identifies the property in two separate parcels,
XXX.
On XXX, both parcels of land were sold by [Original Ground Owner] to [Current
Ground Owner], a related entity of [Assignee]. The terms and conditions of the
XXX 2005 assigned lease remain the same.
FACTS – OPERATING LEASE
On XXX 2005, [Assignee] entered into an Operating Lease with [Hotel Lessee].
[Assignee’s] leasehold interest in the land, along with the hotel and the FF&E was
leased to [Hotel Lessee].
[Assignee’s] leasehold interest in the land, hotel and FF&E includes the hotel, built
in XXX, and the adjacent convention center, built in XXX. These areas are owned
by [Current Ground Owner] and leased to [Hotel Lessee]. The hotel and the
convention center are not separate entities.
Operating Lease rental payments are based on the revenues of hotel operations,
with a guaranteed minimum rental amount and a base credit amount, both of
which are adjusted annually. Operating Lease Lessee is also responsible for the
payment of ad valorem taxes.

Technical Assistance Advisement
Page 4 of 13
TAXPAYER'S POSITION
The Ground Lease between [Original Ground Owner], Lessor, and [Assignee],
Lessee, is taxable as a multiple use property at the hotel use percentage. The
Operating Lease between [Assignee], Operating Lessor, and [Hotel Lessee],
Operating Lessee, is taxable as a multiple use property at the hotel use percentage.
A credit may be taken on a pro-rata basis by [Assignee], for the sales tax paid on
the ground lease.

SQUARE FOOTAGE CALCULATIONS

[Hotel Lessee asserts the] following list contains the square footage amounts for
the taxable hotel use and commercial areas of the leased property. . . .
Square
Footage

Name of Taxable Area

Area #

Comments

XXX Restaurant

Al

Employee Cafeteria
XXX Kitchen
Hotel Offices
Mechanical Equip. Room
Electrical Equip. Room
Laundry
Storage

A4
A10
A11
A12
A13
A14
A15

Game Room

B4

362 Operated by Operating Lessee

Coat Check
Mechanical Equip. Room
Electrical Equip. Room
Storage

B6
B12
B13
B15

675
42
145
342

Sushi Bar/Lobby Bar

C3

5,921

Lobby Bar Storage

C4

XXX Restaurant

C7

2,128

Available Restaurant —
Currently closed

XXX Bar

C8

758

Available Bar — Currently
closed XXX

Kitchen, XXX

C10

1,278 Currently closed

Offices

C11

5,738

Operated by Operating
Lessee
1,252 XXX
5,266
3,610
3,024
86
3,891
11,891
6,283

Operated by Operating Lessee
area around fish tanks/TV’s

290 Storage XXX

Technical Assistance Advisement
Page 5 of 13
Mechanical Equip. Room
Electrical
Storage Spaces
Fire Command Center

Luggage Storage Area

C12
C13
C15
C16
D1 and
D2
D6

Starbucks

D7

1,590 Operated by Operating Lessee

Office
Mechanical Equip. Room
Electrical Equip. Room
Storage Spaces
Offices
Mechanical Equip. Room
Electrical Equip. Room
Storage Spaces

D11
D12
D13
D15
E11
E12
E13
E15

137
1,145
116
2,026
2,101
124
4,996
636

XXX Bar & Storage

Outside

2,860 Operated by Operating Lessee

Sports Bar XXX

963
112
254
139
5,772 Operated by Operating Lessee
708

Fenced area outside
Outside
Fenced area in parking lot Outside
Parking lot Guard Shacks
Outside
x2
Cooling Tower Area
Outside
Total

400
200
80 2 Guard shacks, 8’ x 5’ each
6,300
83,641 Total Taxable Square

[Hotel Lessee asserts the] hotel use square footage of the property is 83,641
square feet. The total area of the grounds is XXX 1,374,318 square feet. [Hotel
Lessee asserts the] taxable use is 83,641 sq ft / 1,374,318 sq ft = 6.086%.
[Hotel Lessee asserts the] following list contains the square footage amounts for
the exempt areas of the leased property (hotel ground floor and land). . . .
Area #

Squar
e

XXX Ballroom

A3

17,155 Ballroom for rental

XXX Prefunction

A2

XXX (Seating Area)

B1

Name of Exempt Area

Comments

Assembly area outside of
ballroom
3,818 Open seating area in hotel,
not a water feature.
2,128

Technical Assistance Advisement
Page 6 of 13
Fitness Center A

B2

2,042

No fee for admittance;
guest use only

Fitness Center B (no
equip.)

B3

417

No fee for admittance;
guest use only

Pool Foyer

B5

678

No fee, assembly area;
guest use only

Business Mailing Center XXX

B11

698

Lobby
XXX Seating Area
XXX Ballroom

Cl
C2
C6

XXX Prefunction

C5

Conference Room
XXX Ballroom

C9
D4

3,221 Open standing area
8,466 Open seating area
6,351 Ballroom for rental
Assembly area outside of
1,843
ballroom
2,082 Conference room for rental
4,102 Ballroom for rental

XXX Prefunction

D3

1,373

Area under construction, will be
breakout/meeting room area for guests

D7

Area next to [coffee shop];
this area will be for general
1,591
use by guests or
conference attendees

XXX Vacation Club

D5

Leased to 3rd party – sales
336 tax on lease collected from
subtenant

XXX Gift Shop

D8

XXX Ballroom*

El

XXX Prefunction*

E2

XXX Ballroom*

E3

XXX Prefunction*

E4

XXX Ballroom*

E5

Leased to 3rd party — sales
tax on lease collected from
subtenant

Assembly area outside of
ballroom

Leased to 3rd party – sales
1,641 tax on lease collected from
subtenant
9,350 Ballroom for rental
Assembly area outside of
2,801
ballroom
12,737 Ballroom for rental
Assembly area outside of
2,801
ballroom
9,350 Ballroom for rental

Technical Assistance Advisement
Page 7 of 13
XXX Prefunction*

E6

11,775

Assembly area outside of
ballroom

• Note: XXX Ballroom can be combined into large Ballroom, or separated into the
  necessary space required by the customer.
  Outside
  Cony.
  Center

Loading Platform

Used by convention center
lessees and attendees to
3,731 load and unload equipment
and other items for use
during their conventions

Parking lot fees, $12 per
day on-site parking, or $16
per day valet.

Remaining square footage for exempt areas
on the ground floor and land including 4
parking lots, 1 valet parking lot, swimming
pool and spa,
2 tennis courts, basketball court, volleyball
court, 5 retention ponds, and all garden
areas and walkways and corridors provided
free of charge to guests . (Note: no guest
rooms are located on the ground floor)

Total

1,180,1
90

Swimming pool, tennis
courts, basketball and
volleyball courts[;] no
admittance fee required
and for guest use only.
Retention ponds are grassy
areas which are available
to guests or the general
public. These areas are
often used by guests when
walking on the premises,
and are often rented to
outside parties for
carnivals or festivals.

1,290,6 Total Exempt Square

Your letter dated January 29, 2009, provides the square footage of the additional floors:
[Hotel] has 10 floors. Due to the layout of the hotel, with the large open atrium in
the center, 26% of the hotel square footage is on the ground floor. The following
list contains square footage amounts for the taxable areas of the hotel above the
ground floor (Floors 2-10).
Name of Taxable Area
XXX Spa
Storage

Floor
2
2

Square
Comments
Footage
4,000 Operated by Lessee
9,200

Technical Assistance Advisement
Page 8 of 13
Housekeeping
Electrical
Mechanical/Boiler
Management Services/Offices
Electrical

2
2
2
2

1,300
680
4,000
4,670
960 Areas adjacent to
stairwells on each floor
(120 sf x 8 floors)
1,920 Areas adjacent to
stairwells on each
floor (240 sf x 8 floors)

3-9
Housekeeping

3-9

Housekeeping

No electrical on 10th
360 floor, extra
housekeeping area

10
Concierge

On 10th floor in front of
elevators
2,160 (240 sf x 9 floors)

10

2 Freight Elevators

1,000

2-9

Total

30,250

Total Taxable Square
Footage, Floor 2-10

The following list contains square footage amounts for the exempt areas of the
hotel above the ground floor (Floors 2-10).
Name of Exempt Area
457 Queen Double
Guest Rooms
259 King Rooms
64 Suites
Conference rooms,
elevators, stairwells,
corridors, hallways
Vending Areas

3-10

Square
Comments
Footage
242,210457 Double Rooms @ 530 sf

3-10
3-10
2-10

137,270259 King Rooms @ 530 sf
78.08064 Suites @ 1,220 sf
84,994

Floor

2-10

Total

1,200
543,754

Total Exempt Square Footage,
Floors 2-10

In conclusion, adding the above additional square footage amounts into our calculation:
the hotel use percentage is reduced from 6.086% to 5.8456% . . . .
APPLICABLE STATUTES AND RULES
Section 212.031, F.S., provides in part:

Technical Assistance Advisement
Page 9 of 13
(1)(a) It is declared to be the legislative intent that every person is exercising a
taxable privilege who engages in the business of renting, leasing, letting, or
granting a license for the use of any real property unless such property is:

2. Used exclusively as dwelling units.

(b) When a lease involves multiple use of real property wherein a part of the real
property is subject to the tax herein, and a part of the property would be excluded
from the tax under subparagraph (a)1., subparagraph (a)2., subparagraph (a)3., or
subparagraph (a)5., the department shall determine, from the lease or license and
such other information as may be available, that portion of the total rental charge
which is exempt from the tax imposed by this section. . . .
(c) For the exercise of such privilege, a tax is levied in an amount equal to 6
percent of and on the total rent or license fee charged for such real property by the
person charging or collecting the rental or license fee. The total rent or license fee
charged for such real property shall include payments for the granting of a
privilege to use or occupy real property for any purpose and shall include base
rent, percentage rents, or similar charges. . . . In the case of a contractual
arrangement that provides for both payments taxable as total rent or license fee
and payments not subject to tax, the tax shall be based on a reasonable allocation
of such payments and shall not apply to that portion which is for the nontaxable
payments.

(2)(b) It is the further intent of this Legislature that only one tax be collected on
the rental or license fee payable for the occupancy or use of any such property,
that the tax so collected shall not be pyramided by a progression of transactions,
and that the amount of the tax due the state shall not be decreased by any such
progression of transactions.
Rule 12A-1.070, F.A.C., provides in part:
(8) When a tenant (lessee) or other person occupying, using, or entitled to use any
real property (licensee) sublets or assigns some portion of the leased or licensed
property, he may take credit on a pro rata basis for the tax that he paid to his
landlord or other such person on the space that he subleases or assigns. Proration
shall be computed on square footage or some other basis acceptable to the
Executive Director or the Executive Director's designee in the responsible
program. . . .
(9) If a tenant or other person sublets or assigns his interest in all of the leased or
licensed premises, or retains only an incidental portion of the entire premises, then
such tenant or other person may elect not to pay tax on the prime lease or license,
provided that such tenant or other person shall register as a dealer and collect and
remit tax due on the sub-rentals or assignments and pay the tax due on the portion
of the rental charges or license fees pertaining to any taxable space which he

Technical Assistance Advisement
Page 10 of 13
retains. If the tenant or licensee elects not to pay the tax to his landlord, or other
person granting the right to occupy or use such real property, he should extend to
his landlord or such other person a resale certificate.

(14)(a) When a rental, lease, or license to use or occupy real property involves
multiple use of such real property wherein a part of the real property is subject to
tax, and a part of the property is excluded from the tax, the Executive Director or
the Executive Director's designee in the responsible program shall determine from
the lease or license and such other information as may be available, that portion of
the total rental charge or license fee which is exempt from the tax. When, in the
judgment of the Executive Director or the Executive Director's designee in the
responsible program, the amount of rent or license fee stated in the lease or
license arrangement for the taxable portion of the real property does not represent
true value, the Executive Director or the Executive Director's designee in the
responsible program shall make a determination of the proper amount of rent or
license fee applicable thereto for the purpose of determining the amount of tax
due from such other information as is available.
DISCUSSION
The Department has not verified the square footage of the figures that were provided.
This response is regarding the methodology you are using to calculate the taxable portion
of lease agreements.
Section 212.031(1)(a), F.S., imposes sales tax on the privilege of engaging in the leasing
of, or the granting of a license to use, real property. Section 212.031(1)(c), F.S., imposes
the tax on the total rent or license fee charged for such real property by the person
charging or collecting the rental or license fee. However, Section 212.031(1)(a)2., F.S.,
excludes real property when such property is “[u]sed exclusively as dwelling units.” The
law further provides that sales tax under Section 212.031, F.S., shall not be pyramided by
a progression of transactions
Section 212.031(1)(b), F.S., authorizes the Department to determine the taxable portion
of the total rent payment when, in a lease of real property, there are multiple uses of such
property and a portion of the property is subject to the tax while another portion is not
subject to the tax, under subparagraphs 212.031(1)(a)1., 2., 3., or 5., F.S. The
Department’s interpretation of this statute provides, in Rule 12A-1.070(14)(a), F.A.C.,
that the Department shall determine, from the lease or license agreement or other
pertinent information available, that portion of the rental charge that is exempt from tax.
Here there is a ground lease between Current Ground Owner and Assignee, and an
operating lease between Assignee and Hotel Lessee. The operating lease premises
include the land, all buildings, structures, other improvements, fixtures, equipment,
furniture, and furnishings. Because there are two leases, we must calculate the taxable
portion for each separately.

Technical Assistance Advisement
Page 11 of 13
The following equation is a reasonable method useful for calculating the taxable portion
of a lease payment under a lease for multiple use property, such as a hotel. The equation
multiplies the total rent or license fee by a fraction, the numerator of which is the square
footage used by the lessee for its own purposes, and the denominator of which is the
entire square footage of the land demised by the lease.
Computing the Numerator on the Ground Lease
The numerator is comprised of the total square footage of the premises that is used
exclusively by the Lessee for its hotel related purposes, plus any other square footage
used by the Lessee that is not guest rooms or common areas principally provided for use
of the guests, and for which either: (a) the Lessee does not impose a charge for the use of
such areas (e.g., a lounge providing complimentary food and drinks); or (b) the Lessee
imposes a separate charge for the use of an area and that charge is subject to tax under a
provision of Chapter 212, F.S., other than Section 212.031, F.S. (e.g., a health club
requiring an additional charge that would be subject to tax as an admission). Also, the
numerator would include any land demised under the lease, whether developed or
undeveloped, and used exclusively by the lessee. This includes areas of land that cannot
be developed due to certain restrictions and cannot be used by the hotel guests.
The ground lease only covers the land and first floor of the hotel. Your letter provides
that guests are entitled, without additional charge, to the use of the pool, pool foyer,
lagoon, fitness centers, lobby, tennis, basketball, volleyball, garden areas, and common
walkways. The guests are allowed access to these areas for no charge; therefore, these
areas are exempt. These areas should not to be included in the numerator.
Areas designated as subleased spaces, such as the ballrooms, prefunction rooms,
conference room, business mailing center, car rental office, gift shop, and loading
platform, wherein the tax is paid by a third-party sublessee, would not be included in the
numerator. Likewise, you provide that the retention pond areas are used by the guests and
rented to third parties. Usually, retention ponds are not subleased. However, sufficient
evidence has been provided that the retention ponds are re-rented to third parties. These
areas are excluded in the numerator, because otherwise it would cause the area to be
subject to the same tax twice, once on the hotel lease and then to the third-party.
Specifically, Section 212.031(2)(b), F.S., prohibits the pyramiding of tax by a
progression of transactions. You also should note that this statute does not permit the
amount of tax due to the state to be decreased by such a progression of transactions. The
amount of tax remitted for each of the subleased retail areas, meeting rooms, ballrooms
and retention ponds should not be less than the amount that would be due if these areas
were not subleased for a given rental payment period under the lease (the ground lease
provides for payments each calendar quarter). Therefore, if the retention ponds are not
subleased in a quarter, or the area is not subleased for more than the amount of that area
charged under the ground lease in a quarter, then tax will be due on the rental
consideration paid on the lease.
Based on the facts presented and above analysis, your proposed taxable percentage of
6.086% is a reasonable determination under the facts provided and therefore the tentative

Technical Assistance Advisement
Page 12 of 13
portion of the rent due under the ground lease subject to sales tax. This percentage is
based on the taxable area of 83,641 square feet divided by 1,374,318 total square feet.
Rule 12A-1.070(8) and (9), F.A.C., further provides that when a person sublets or assigns
his interest in all of the leased premises he may extend a resale certificate to his
immediate landlord and remit tax pertaining to any taxable space which he retains. Here,
Assignee is releasing the entire ground lease to Hotel Lessee, and Assignee is not
retaining use of any of the grounds. Therefore, no tax would be due on the ground lease
between Current Ground Owner and Assignee if Assignee extended its valid Florida
Resale Certificate.
If Assignee decided not to extend its resale certificate, then Assignee would pay tax on
the 6.086% percent of the rent on the ground lease to Current Ground Owner. Assignee
could then take a lawful deduction on its Form DR-15 for tax paid on the ground lease
that is released under the operating lease.
Computing the Numerator on the Operating Lease
All exempt areas under the ground lease are likewise exempt under the operating lease.
However the operating lease covers every floor of the building; therefore, the numerator
and denominator will change.
The denominator is total square footage demised under the operating lease. This includes
all land and each floor of the Hotel. Here, the total square footage under the operating
lease is 1,948,322 square feet.
The numerator is comprised of the total square footage of the premises that is used
exclusively by the Lessee for its hotel-related purposes, plus any other square footage
used by the Lessee that is not guest rooms or common areas principally provided for use
of the guests for a charge. Under the operating lease, 113,891 square feet are used for
these taxable purchases.
Therefore, 5.8456% of the total rental consideration paid by Hotel Lessee for the
operating lease is subject to sales tax under Section 212.031, F.S.
CONCLUSION
If Assignee extends a valid resale certificate to Current Ground Owner, then no sales tax
is due on the ground lease. However, if Assignee does not extend a valid resale
certificate, then based on the figures provided, 6.086% is a reasonable determination of
the rental consideration paid on the ground lease that is subject to sales tax. Assignee
could then take a credit on its sales and use tax return for sales tax paid on areas that are
subleased to Hotel Lessee.
In either situation based on the figures provided, the proposed taxable percentage of
5.8456% is a reasonable determination on the operating lease and therefore the portion of
the rental consideration paid by Hotel Lessee subject to sales tax.

Technical Assistance Advisement
Page 13 of 13
This response constitutes a Technical Assistance Advisement under Section 213.22, F.S.,
which is binding on the Department only under the facts and circumstances described in
the request for this advice as specified in Section 213.22, F.S. Our response is predicated
on those facts and the specific situation summarized above. You are advised that
subsequent statutory or administrative rule changes, or judicial interpretations of the
statutes or rules, upon which this advice is based, may subject similar future transactions
to a different treatment than expressed in this response.
You are further advised that this response, your request and related backup documents are
public records under Chapter 119, F.S., and are subject to disclosure to the public under
the conditions of s. 213.22, F.S. Confidential information must be deleted before public
disclosure. In an effort to protect confidentiality, we request you provide the undersigned
with an edited copy of your request for Technical Assistance Advisement, the backup
material and this response, deleting names, addresses and any other details which might
lead to identification of the taxpayer. Your response should be received by the
Department within 15 days of the date of this letter.

Sincerely,

H. French Brown, IV
Attorney
Technical Assistance and Dispute Resolution
(850) 922-4708
HFB/
Ctrl# 58056