May a Florida landlord allocate rent for multiuse commercial property by square footage when different areas have different sales-tax treatment?

Plain-English summary

The Florida Department of Revenue accepted a landlord's square-footage method for allocating rent among different uses of multiuse commercial property. Some redacted areas were subject to the commercial-rent tax, some parking or storage areas were taxed under a different provision, and another redacted use qualified for an exemption.

Section 212.031(1)(b) requires an allocation when one part of leased property is taxable and another part is excluded. The Department found square footage reasonable if the different areas had similar rental value. If one category had a higher market value, the landlord would need to adjust the method rather than treating every square foot equally.

The Department also required genuinely exclusive use. Space designated for the redacted exempt activity did not remain exempt when it was also used for parking. The landlord could apportion the area used solely for the exempt purpose from the total leased area to determine the taxable rent.

What this means for you

Commercial landlords

Map each part of multiuse premises to its actual use and applicable tax rule. A floor-plan allocation may work, but only when the relative rental values are comparable.

Property managers and billing teams

Occasional secondary use can defeat an exclusive-use exemption. Lease language, site plans, and actual tenant practices should agree before rent is allocated among tax categories.

Accountants and tax professionals

The rates quoted in this 2019 TAA reflect the law then in effect. The enduring point is the allocation method: square footage was accepted conditionally, while unequal market values required modification.

Common questions

Q: Was square footage an acceptable allocation method?
A: Yes, based on the supplied facts and the assumption that all areas had similar rental value.

Q: What if some areas are more valuable per square foot?
A: The Department said the allocation would need to be modified to reflect the difference.

Q: Can exempt-use space also be used occasionally for parking?
A: No. The ruling says the exemption applied only to areas used exclusively for the qualifying purpose.

Q: Does this page give current Florida commercial-rent rates?
A: No. The TAA states historical 2018 and 2019 rates; verify the rate and governing law for the period at issue.

Citations and references

• Fla. Stat. §§ 212.03(6), 212.031(1), and 213.22
• Fla. Admin. Code r. 12A-1.070(1)(a)6.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 19A-002

Original ruling text

TAX: Sales and Use Tax
TAA NUMBER: 19A‐002
ISSUE: Multiuse real property rentals.
STATUTE CITE(S): Section(s) 212.031, and 212.03(6), F.S.
RULE CITE(S): Rule 12A‐1.070, F.A.C.
QUESTIONS: Is Taxpayer’s method to allocate multiuse property reasonable?
ANSWER: Yes. Section 212.031(1)(b), F.S., requires an apportionment when certain property
of a lease is subject to an exemption for parking. Taxpayer proposes to apportion the portions
of the lease involving different uses by using square footage information. Rule 12A‐
1.070(1)(a)6., F.A.C., provides an example of a lease using square footage information. Areas
required to be used exclusively in a certain manner may not be used occasionally for other
purposes.
January 25, 2019

XXXXXXXXXXXXX
XXXXXXXXXXXXX
XXXXXXXXXXXXX
XXXXXXXXXXXXX
Subject: Technical Assistance Advisement (“TAA”)
TAA 19A‐002
AMS#: 7000137607
Sales and Use Tax‐XXXXXXXX
Section(s) 212.03(6) and 212.031, Florida Statutes (“F.S.”)
Rule(s) 12A‐1.070, Florida Administrative Code (“F.A.C.”)
XXXXXXXXXXXXXXX (“Petitioner”)(“Taxpayer”)
Business Partner Number: XXXXXXX
FEIN: XX‐XXXXXXX

January 25, 2019
Florida Department of Revenue
Page 2

XXXXXXXXXXXXXX (“Landlord”)
Dear XXXXXXXXX:
This letter is a response to your petition dated November 26, 2018, for the Department’s
issuance of a Technical Assistance Advisement (“TAA”) to Petitioner, regarding real property
rentals at Taxpayer’s location. Your petition has been carefully examined, and the Department
finds it to be in compliance with the requisite criteria set forth in Rule Chapter 12‐11, F.A.C.
This response to your request constitutes a TAA and is issued to you under the authority of
section 213.22, F.S.
Facts
Landlord leases commercial real property at an XXXXXXX to several tenants. The property has
multiple uses. Landlord has several types of leases, described by Landlord as Office Leases,
Land Leases, XXXXXXX Leases, XXXXXXXXX Leases, XXXXXXX Leases, XXXXXXX Leases, and XXX
XXXXX XXXXXX Leases. Office Leases provide tenants with office space in the commercial
XXXXXXXXX or XXXXXX office buildings for various commercial purposes. Land Leases allow
tenants to construct improvements for storage and XXXXXXX of XXXXXX. XXXXX Leases allow
tenants to rent XXXXX space for storage of XXXXXX. XXXXX Leases allow tenants to rent
XXXXXXXXXXX space for storage of XXXXXX. XXXXXXXX Leases allow tenants to use space for
storage of XXXXXXX and XXXXXX related property, or storage of non‐XXXXXXX related property.
XXXXXXXXX Leases allow tenants to store XXXXXX and XXXXXXX related property. The
XXXXXXXXXX Lease also allows use of the leased property for commercial office purposes,
XXXXXXXXX, and parking vehicles. The XXX XXXXX XXXXXX Leases allow tenants to rent office
space for commercial purposes, and to use designated areas for parking XXXXXX vehicles.
Taxpayer Position
Taxpayer maintains that different tax rates apply for the different leases, and different spaces
used in the leases.
Office Leases: The total rent charged under the Office Leases is subject to Florida sales tax at
the rate of 5.8% through December 31, 2018 (and 5.7% on and after January 1, 2019).
Land Leases: The total rent charged under the Land Leases, regardless of how any
improvements constructed on the leased land are used, is subject to Florida sales tax at the
rate of 5.8% through December 31, 2018 (and 5.7% on and after January l, 2019).
XXXXXX: The total rent charged under the XXXXXXX Leases is subject to Florida sales tax at the
rate of 6.0% from the date hereof (both before and after January l, 2019).
XXXXXXX: The total rent charged under the XXXXX Leases is subject to Florida sales tax at the
rate of 6.0% (both before and after January l, 2019).

January 25, 2019
Florida Department of Revenue
Page 3

XXXXXXX Leases: The Florida sales tax rate applicable to the XXXXXX Leases depends on the
actual use of the leased space.
If the leased space is used solely for the storage of XXXXX and XXXXXX related property, then
the total rent charged under such XXXXXXXX Leases is subject to Florida sales tax at the rate of
6.0% (both before and after January l, 2019). If the leased space is used solely for the storage
of non‐XXXXXXX related property, then the total rent charged under such XXXX Leases is
subject to Florida sales tax at the rate of 5.8% through December 31, 2018 (and 5.7% on and
after January 1, 2019).
If the leased space has multiple uses for both the storage of XXXXXX and XXXXXXX related
property, and the storage of non‐XXXXXXX related property, then such XXXXXXXXX Leases are
subject to Florida sales tax at two different rates. The rate is 6.0% (both before and after
January 1, 2019) on the pro rata portion of the total rent charged for the storage of XXXXXXX
and XXXXX related property calculated by dividing the square footage used for the storage of
XXXXXXXX and XXXXXXX related property by the total square footage of the entire leased
space. The rate is 5.8% through December 31, 2018 (and 5.7% on and after January 1, 2019)
on the pro rata portion of the total rent charged for the storage of non‐XXXXXXXX related
property calculated by dividing the square footage used for the storage of non‐XXXXXX related
property by the total square footage of the entire leased space.
For example, a tenant under such a hybrid XXXXXXXX Lease pays total monthly rent of
$1,000.00 on December 1, 2018 for 1,000 total square feet of leased space. 700 square feet
(i.e., 70%) of such leased space is used to store XXXXXX and XXXXXXXX related property, and
the remaining 300 square feet (i.e., 30%) of such leased space is used to store non‐XXXXX
related property. The sales tax due on the monthly rent would be $59.40. Sales tax due on
the area to store XXXXXXXX would be $42 tax, and the storage areas of non‐XXXXXXXXX
property is $17.40.
XXXXXXXXXX Leases: The Florida sales tax rate applicable to the XXXXXXXXXXXXXX Leases
depends on the actual use of the leased space.
If the leased space is used solely for the storage of XXXXXX and XXXXXXXX related property,
then the total rent charged under such XXXXXXXXXXXX Leases is subject to Florida sales tax at
the rate of 6.0% (both before and after January 1, 2019).
If the leased space is used solely for either the storage of non‐XXXXXXXX related property or
commercial office purposes (or both), then the total rent charged under such XXXXXXXXXX
Leases is subject to Florida sales tax at the rate of 5.8% through December 31, 2018 (and 5.7%
on and after January 1, 2019).
If the leased space is used solely for XXXXXXX of XXXXXX, then the total rent charged under
such XXXXXXXX XXXXXX Leases is exempt from Florida sales tax (both before and after January
1, 2019).

January 25, 2019
Florida Department of Revenue
Page 4

If the leased space is used solely for parking vehicles, then the total rent charged under such
XXXXXXXXXXX Leases is subject to Florida sales tax at the rate of 6.0% (both before and after
January 1, 2019).
If the leased space has multiple uses for storage of XXXXXXXX and XXXXXXX related property,
commercial office purposes, XXXXXX of XXXXXXX and parking vehicles, then such hybrid
XXXXXXXXX Leases are subject to Florida sales tax at three rates. The rate is 6.0% (both before
and after January 1, 2019) on the pro rata portion of the total rent charged for the storage of
XXXXXXX and XXXXXX related property, and for parking vehicles. The calculation is made by
dividing the square footage used for the storage of XXXXXXX and XXXXXXX related property,
and for parking vehicles by the total square footage of the entire leased space.
The rate is 5.8% through December 31, 2018 (and 5.7% on and after January 1, 2019) on the
pro rata portion of the total rent charged for the storage of non‐XXXXXXX related property and
commercial office purposes. The calculation is made by dividing the square footage used for
the storage of non‐XXXXXXX related property and commercial office purposes by the total
square footage of the entire leased space. The rate is 0.0% (both before and after January 1,
2019) on the pro rata portion of the total rent charged for the XXXXXXX of XXXXXXX calculated
by dividing the square footage used for the XXXXXXXX of XXXXXXXXX by the total square
footage of the entire leased space.
For example, if a tenant under such a hybrid XXXXXXXX XXXXXXX Lease pays total monthly rent
of $1,000.00 on December 1, 2018 for 1,000 total square of leased space. 650 square feet
(i.e., 65%) of such leased space is used to store an XXXXXXXX and XXXXXXXX related property.
200 square feet (i.e., 20%) of such leased space is used for commercial office purposes. 100
square feet (i.e., 10%) of such leased space is used for XXXXXXXX of XXXXXXX and the
remaining 50 square feet (i.e., 5%) of such leased space is for parking vehicles, then the sales
tax due on the monthly rent would be $53.60. The sales tax is $39.00 on the space used for
storing XXXXXXX and XXXXXXXXX related property. The sales tax is $3.00 for parking vehicles.
The sales tax is $11.60 for the office space.
XXX XXXXXX XXXXXXX Leases: The Florida sales tax rate applicable to the XXX XXXXX XXXXXX
Leases depends on the actual use of the leased space.
If the leased space is used solely for commercial office purposes, then the total rent charged
under such XXX XXXXX XXXXXX Leases is subject to Florida sales tax at the rate of 5.8% through
December 31, 2018 (and 5.7% on and after January 1, 2019).
If the leased space is designated areas used solely for parking XXXXX vehicles, then the total
rent charged under such XXX XXXXX XXXXXX Leases is subject to Florida sales tax at the rate of
6.0% (both before and after January 1, 2019).
If the leased space has multiple uses for commercial office purposes and parking XXXXX
vehicles, then such hybrid XXX XXXXX XXXXXX Leases are subject to two different Florida sales

January 25, 2019
Florida Department of Revenue
Page 5

tax rates. The rate is 5.8% through December 31, 2018 (and 5.7% on and after January 1,
2019) on the pro rata portion of the total rent charged for commercial office purposes. The
calculation is made by dividing the square footage used for commercial office purposes by the
total square footage of the entire leased space. The rate is 6.0% (both before and after
January 1, 2019) on the pro rata portion of the total rent charged for parking XXXXX vehicles.
The calculation is made by dividing the square footage used for parking XXXXX vehicles by the
total square footage of the entire leased space.
For example, if a tenant under such a hybrid XXX XXXXX XXXXXX Lease pays total monthly rent
of $1,000.00 on December 1, 2018 for 1,000 total square of leased space, and 250 square feet
(i.e., 25%) of such leased space is used for commercial office purposes and the remaining 750
square feet (i.e., 75%) of such leased space is for parking XXXXX vehicles, then the sales tax
due on the monthly rent is $59.50. The sales tax due on the space used for commercial office
purposes is $14.50. The sales tax due for parking vehicles is $45.00.

Taxpayer Questions
You would like to know if Taxpayer’s characterization of computing the tax regarding the tax
rates and the method for proration is reasonable. Also, for XXXXXX areas, Taxpayer would like
to know the Department’s position as to whether the XXXXXXXX areas used occasionally for
XXXXXX parking is considered as exclusively used for XXXXXXX.
Law and Discussion
Section 212.031(1), Florida Statutes (“F.S.”), requires landlords to collect sales tax on real
property rentals. The sales tax rate for rentals due after January 1, 2019 is 5.7%. Section
212.031(1)(a)3., F.S., provides an exemption from the tax imposed by s. 212.031, F.S., for
property subject to tax on parking, docking, or storage spaces under s. 212.03(6), F.S. XXXXXXX
XXXXXXXXXXXXXXX, XXXXXXXX XX XXXXXXXXX XXX “XXXXXXXX XXXX XX XX XXXXXXX
XXXXXXXXXXX XXX XXX XXXXXXXX XX XXXXXXX XXXXXXX XX XXXXXXX XXXXXXX XX XXXXXXXX
XXXX XX XX XXXXXXX XXX XXX XXXXXXX XX XXXXXXX XX XXXXXXXXX XXXXXXXXXX XX XXXXXXXX
XXXX XX XXXX XXXXXXX XX XXX XXXXXXX XXXXXXX.”
Section 212.031(1), F.S., provides for proration of rentals involving multiple use property as
with certain XXXXXX property, including here. The statute section provides, in part, the
following:
(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.,

January 25, 2019
Florida Department of Revenue
Page 6

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….
Section 212.03(6), F.S., provides, in part, the following:
(6) The Legislature finds that every person who leases or rents parking or
storage spaces for motor vehicles in parking lots or garages, including storage
facilities for towed vehicles, who leases or rents docking or storage spaces for
boats in boat docks or marinas, or who leases or rents tie‐down or storage space
for aircraft at airports is engaging in a taxable privilege.
(a) For the exercise of this privilege, a tax is hereby levied at the rate of 6
percent on the total rental charged.
Section 212.031(1)(b), F.S., provides that for leases involving multiuse property, a
determination of the portion subject to sales tax is to be made. Rule 12A‐1.070(1)(a)6., Florida
Administrative Code (“F.A.C.”), provides an example regarding XXXXXXX multiuse property.
Taxpayer will use a method using square footage information. Presuming that the property
value throughout the XXXXXXXX is the similar, then this method is reasonable. However, for
example, if XXX XXXXX XXXXXXXX areas have a higher market value than parking, then Taxpayer
will be required to modify its method of allocation to determine the taxable rental portion.
XXX XXXXXXX XXXXX, XXX XXXXXXXXX XXXXXXXX XX XXXXXXXXXXXXXXXXXXXXX, only applies to
areas used exclusively for XXXXXXX. It does not apply to areas of which XXXXXXX movement is
restricted for the use of parking, or otherwise. The XXXXXXX areas that Taxpayer’s tenants use
for parking does not qualify for the exemption. Taxpayer may determine the rental portion
exempt from the tax by using an apportionment based on square footage information
regarding the manner of use of the XXXXXXX areas.
Response
Based on the facts provided, and assuming that all areas of the XXXXXX have similar rental
value, the tax rates and apportionment methods proposed by Taxpayer are reasonable. For the
XXXXXX areas in which Taxpayer uses for parking, Taxpayer may apportion the XXXXXXX area
solely used for XXXXXXX compared to the total area that the lease allows for XXXXXXX to
determine the taxable rental amount.
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

January 25, 2019
Florida Department of Revenue
Page 7

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 section 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 10
days of the date of this letter.
Respectfully,
Chuck Wallace
Chuck Wallace
Technical Assistance & Dispute Resolution
(850) 717‐7541
AMS #: 70001376007