Sales tax may be due in a Florida real estate deal when tangible personal property is part of the transaction. If sales tax is owed, the seller must collect the tax and pay it over to the Florida Department of Revenue with a sales tax return.
Examples of tangible personal property in residential real estate closings:
In commercial real estate deals, tangible personal property might include:
Option 1: Occasional or Isolated Exception
When the transfer of tangible personal property in Florida is incidental to the sale of the real estate, it is not subject to sales tax. Including language to reflect the incidental nature of the tangible personal property to the transfer of the real estate is common in Florida real estate purchase and sale agreements. This language allows for an exemption in Florida from the requirement for the seller to collect and pay sales tax because the tangible personal property transferred to the buyer is an occasional or isolated transaction.
Unfortunately, for reasons better known to the legislature and the Florida Department of Revenue the occasional or isolated sale exemption rarely applies in Florida real estate transactions. To benefit from the exemption mentioned above, a seller cannot use a broker or real estate sales agent to sell the real estate. Using real estate agents is routine in many if not most Florida real estate transactions.
Option 2: Properly Drafted Contract
The buyer and seller may lawfully side-step this issue by not stating a price or value for the tangible personal property. Unless seller wants to sell the tangible personal property separately from the real estate, the sales contract should not state a value for each item of tangible personal property and include only the sales price of the real estate in the purchase and sale agreement.
Stross Law Firm, P. A. is a real estate title insurance and closing agent. Our real estate attorneys can review your sales contract and make sure it is properly drafted to avoid any sales tax issues.
This article is for general information only and is not intended to provide legal advice. The facts of your situation are unique and you should seek the guidance of an experienced real estate attorney. If you have questions about buying or selling property in Florida, please call us at 813-852-6500 for a free 30-minute consultation.