Were electricity and LP gas purchased by a homeowners' association for exclusively residential common areas exempt from Florida sales tax?

Plain-English summary

Florida held that a homeowners' association's purchases of electricity and LP gas for its residential common areas were exempt from sales and use tax.

The association served 200 residences. Its clubhouse, pool and spa, marina, pavilion and picnic area, and boat-storage area were commonly owned or used by residents and available only to homeowners and their guests. The association did not hold them open to the public or impose a separate admission charge.

Fla. Stat. Sec. 212.08(7)(j) required both a residential household and exclusively residential use. If any electricity or fuel on the sale were used for a nonexempt purpose, the entire sale would be taxable. The TAA found the described common areas residential and the electricity and LP gas exempt. It also noted that piped or irrigation water was exempt under Sec. 212.08(4)(a)1.

What this means for you

Homeowners' associations

The exemption depended on exclusive residential use. Public access, commercial use, or a separate admission charge could change the result.

Utility providers and property managers

Separate meters and clear documentation of each common area's use help establish whether the residential exemption applies.

Common questions

Were electricity and LP gas for the common areas exempt? Yes, on the stated facts.

Did the common areas have to touch every residence? No. The TAA said common areas need not be contiguous to each residential unit if residents share ownership and use.

What if some utility use were commercial? The ruling said any nonexempt use would make the entire sale taxable under Sec. 212.08(7)(j).

Citations and references

• Fla. Stat. Sec. 212.08(7)(j)
• Fla. Stat. Sec. 212.08(4)(a)1.
• Fla. Admin. Code R. 12A-1.053
• Fla. Admin. Code R. 12A-1.059

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 22A-008

Original ruling text

QUESTION: Whether the purchase of utilities and fuel by Taxpayer for the common areas for residential
use only is exempt from Florida sales tax under s. 212.08(7)(j), F.S.
ANSWER: The purchase of utilities and fuel by Taxpayer for use in the common areas, which are used
exclusively for residential purposes, is exempt from Florida sales and use tax.

April 29, 2022

XXXX
XXXX
XXXX
Re:

Technical Assistance Advisement 22A-008
Florida Sales and Use Tax
XXXX (“Taxpayer”)
BP: XXXX
Sections 212.02, 212.05 and 212.08 Florida Statutes (F.S.)
Rules 12A-1.053 and 12A-1.059, Florida Administrative Code (F.A.C.)

Dear XXXX:
This letter is in response to your request dated December 30, 2021, and received in this office on
January 4, 2022, for issuance of a Technical Assistance Advisement (“TAA”) pursuant to Section
213.22, F.S., and Rule Chapter 12-11, F.A.C., concerning the matter referenced below. An
examination of your request has established you complied with the statutory and regulatory
requirements for issuance of a TAA. Therefore, the Department is hereby granting your request
for a TAA.
REQUESTED ADVISEMENT
Whether the purchase of utilities and fuel by Taxpayer for the common areas for residential use
only is exempt from Florida sales tax under s. 212.08(7)(j), F.S.
STATED FACTS
Taxpayer is a subdivision homeowners association registered in the State of Florida as a nonprofit corporation that services a community of 200 residences. Each member of the
homeowners association owns the property where the home is located, and each homeowner
shares equally in the common areas. The common areas are designated for the exclusive and

Technical Assistance Advisement
April 29, 2022
Florida Department of Revenue
Page 2

free use of homeowners and their guests. The amenities in these common areas include a
clubhouse, a pool and a spa, a marina, a pavilion and picnic area, and a boat storage area.
Taxpayer is currently leasing the boat storage area from the City of XXXX but is in the process of
attempting to buy the storage lot and own the property by early next year.
XXXX (“XXXX”) is Taxpayer’s utility provider and supplies electricity to each of these common
areas. Each of the five common areas has a separate electrical meter. The City of XXXX (“Water
Provider”) supplies water to the clubhouse, pool, and spa areas, and water for the irrigation
system1. XXXX (“L.P. Gas Provider”) delivers liquid petroleum (L.P.) gas to an on-site storage tank.
The L.P. gas is only used to heat the water for the spa and L.P. Gas Provider meters it.
LAW & DISCUSSION
Section 212.05, F.S., provides every person is engaged in a taxable privilege when engaging in the
business of selling, at retail, tangible personal property in Florida. In order to exercise such a
privilege, tax is levied at a rate of 6%. See s. 212.05(1)(a)1.a., F.S. Tangible personal property is
defined as personal property which may be seen, weighed, measured, or touched, or is in any
manner perceptible to the senses, including electric power or energy (“electricity”), and fuel. See
s. 212.02(19), F.S. Therefore, the sale of electricity and fuel (including L.P. gas) in Florida is subject
to tax, unless a specific exemption applies.
Section 212.08(7)(j), F.S., provides an exemption for the sale of electricity and fuel to "residential
households." This provision states that if any part of the electric power or energy, or fuel is used
for a nonexempt purpose, the entire sale is taxable. Thus, the statute contains two requirements:
(1) the sale must be to a residential household, and (2) there can be no use for a nonexempt
purpose (i.e., the use must be exclusively for residential purposes).
Under Rule 12A-1.053(1)(a), F.A.C., this exemption applies to the sale of electricity by utility
companies when the electricity is used in the common areas of apartment houses, cooperatives,
condominiums and other residential facilities, provided the electricity is not used for a
nonexempt purpose. “Common area” is not defined in the Florida Statutes nor in Rules 12A1.053 and 12A-1.059, F.A.C. Where a word is not defined by statute or the intent of the word’s
usage is unclear, a court will resort to principles of statutory construction and may determine the
plain and ordinary meaning of the word from a dictionary. See Nehme v. Smithkline Beecham
Clinical Labs., Inc., 863 So. 2d 201, 204-05 (Fla. 2003) (quoting Seagrave v. State, 802 So. 2d 281,
286 (Fla. 2001)). A common area is an area in common ownership and use by residents of
condominium, subdivision, or planned unit development, in contrast with areas in which
members of the residential household enjoy the exclusive right of possession. Black’s Law
Dictionary 275 (6th ed. 1990). Therefore, in a residential development or subdivision, the
1

The sale of water delivered to the purchaser through pipes or conduits or delivered for irrigation purposes is exempt
from sales and use tax. Section 212.08(4)(a)1., F.S.

Technical Assistance Advisement
April 29, 2022
Florida Department of Revenue
Page 3

common area may include roads within the development, parks, area pools, playgrounds, etc.
Common areas do not have to be contiguous to each residential unit or space so long as the
residents of the condominium, subdivision, or planned unit development share common
ownership and use of the area.
Under Rule 12A-1.059(1)(a), F.A.C., the sale of fuel, including L.P. gas, is exempt when used in
common areas of apartments, cooperatives, and condominiums provided that none of the fuel
is used for sales offices or other non-exempt (commercial) purposes. The statutory interpretation
of “common areas” in Rule 12A-1.053(1)(a), F.A.C., discussed above applies to Rule 12A1.059(1)(a), F.A.C.
In summary, the sale of electricity and L.P. gas are exempt from taxation under s. 212.08(7)(j),
F.S., if: common areas are intended for the exclusive use of the owners, tenants, and their guests;
are not held out for use by the public; and no separate charge or admission fee is made or
collected for the use of any part of the common areas, exclusive of assessments made against
residents of the condominium, subdivision, or planned unit development for their shares of
expenses for maintenance of common areas.
Based on the facts stated, the clubhouse, pool and spa, marina, pavilion and picnic area, and boat
storage area are common areas. Because these areas are commonly owned by the residents and
used exclusively for residential purposes, the electricity and L.P. gas used in these common areas
qualifies for the exemption in s. 212.08(7)(j), F.S.

CONCLUSION
The purchase of utilities and fuel by Taxpayer for use in the common areas, which are used
exclusively for residential purposes, is exempt from Florida sales and use tax.
For more information concerning all the taxes administered by the Department of Revenue,
please refer to the Department’s Internet site at:
http://floridarevenue.com
This response constitutes a Technical Assistance Advisement under s. 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 s. 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 and your request and related backup documents are
public records under Chapter 119, F.S., and are subject to disclosure to the public under the

Technical Assistance Advisement
April 29, 2022
Florida Department of Revenue
Page 4

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.
Kind Regards,

Xiaoxi Miao
Tax Law Specialist
Technical Assistance & Dispute Resolution
XM\tadrstaff
Record ID: 648962