Many owners of real property in Florida do not realize what real property taxes must be be paid and when. We would like to point out two of the biggest tax issues related to real property ownership in Florida that most of our clients overlook: real property taxes and sales taxes.
Real property tax bills in Florida are mailed out in October of each year. The TRIM Notice, or estimate of what the tax bill will be, is mailed out in August of each year. Owners should review these to ensure the property is being taxed at the appropriate value. The time period in which to file an appeal of the valuation is very short, so it is imperative that owners review the TRIM notice quickly and file an appeal quickly or they will be barred from filing a valuation appeal at all. Real property taxes are due on November 1 with discounts for early payment. Each county tax collector in Florida has a website where owners can review and print their tax bills. Florida Statutes require that notice of the tax bill be mailed by first class mail. However, the law also presumes that owners should know when taxes are due. Therefore, if an owner has not received a bill, it is the owner’s responsibility to seek a copy of it. Failure to receive a tax bill is never an excuse for non-payment. Therefore, if a property is held in an entity or trust such that the bill goes to a third party, it is ultimately the true owner’s responsibility to seek out and obtain the tax bill each year.
Secondly, many of our clients do not realize that sales tax must be paid on non-residential rents. Sales tax is not only assessed on the rent itself, but also on common area maintenance charges, amounts paid for a mortgage, property taxes or insurance premiums that cover the landlord’s structure. The tax applies even if the payments are made between “related persons” as defined in F.S. 212.02(12). For example, if a Alicia’s LLC owns the building where Alicia’s corporation operates a restaurant, then sale tax must be paid on the mortgage payments that the corporation may pay on the LLC’s behalf for the building. If Alicia’s corporation also pays insurance on the LLC’s building, then sales tax must be paid on that as well. Currently, Florida has a tax amnesty program in effect if such taxes have not been paid in the past. However, the program expires on September 30, 2010. Under the program, all penalties are waived, and interest may be reduced up to 50 percent.
At this time of year, we are reminded of the tax implications of owning Florida real estate when our clients call for copies of their tax bills for properties we hold in trust through our affiliated company, TRSTE, LLC. Also, the Florida Department of Revenue often reminds us of the sales tax issues related to rents on commercial properties when it sees that TRSTE, LLC holds such property, but the Department cannot see where TRSTE, LLC remits the sales tax. For this reason, we want to remind everyone that the tax collectors are out there, even if you never receive a bill.
