Calculating the Florida sales tax on improvements to real property requires proper planning. Under the Florida sales and use tax act, taxpayers are responsible for paying a 6 percent statewide and in some instances a countywide-imposed discretionary sales surtax on the purchase or use of a taxable good or service. In the case of a sale for the purpose of making an improvement to real property, the same 6 percent and, where appropriate, a countywide discretionary sales surtax may apply to both the service and materials used in making the real property improvement.
Read rule12A-1.051(2),(17),(18) of the Florida Administrative Code, "Sales to or by contractors who repair, alter, improve and construct real property," and the Florida Department of Revenue brochures "Sales and Use Tax on Construction, Improvements, Installations and Repairs" and "Florida’s Discretionary Sales Surtax." Combined, these documents describe the legal and compliance requirements that will enable you to understand what goods and services are subject to the sales tax and discretionary sales surtax including those associated with improvements to real property. A copy of these documents can be viewed online at the Florida Department of Revenue website.
Complete the application to collect and or report tax in Florida, Form DR-1. Provide your business's current address, business entity identification number and information about your type of business activity subject to taxation. A copy of this form can be obtained online from the Florida Department of Revenue website, or you can complete the application online at the same website.
Establish the contractual arrangement you will use to complete the improvement to real property -- for instance, indicate whether the work will be completed under the terms of a lump-sum, cost-plus, fixed-fee, guaranteed-price, time-and-materials real property or retail sale plus installation contract.
List all goods and services under the contract that are subject to the sales tax and the applicable county discretionary sales surtax. For instance, if the improvement to real property was being performed under a guaranteed-price contract, all of the supplies and materials that you used -- such as drywall, plasterboard and insulation -- would need to be itemized.
Apply the statewide 6 percent sales tax as well as the applicable county discretionary sales tax to all taxable goods and services under the contract for the improvement to real property. For instance, assume that the cost of all materials under a guaranteed-price contract total $600 in the Florida county of Bradford, which imposes a 1 percent discretionary sales surtax. You would owe $36 in state sales tax and $6 in discretionary sales surtax. These figures were arrived at by multiplying $600 by 0.06 to arrive at the state sales tax and $600 by 0.01 to arrive at the discretionary sales surtax.
If you have questions or concerns with how to calculate the sales tax on your improvement to real property, contact the Florida Department of Revenue at 800-352-3671.
- Florida Department of Revenue: Florida's Sales and Use Tax
- Florida Department of Revenue: 12A-1.051 Sales to or by Contractors Who Repair, Alter, Improve and Construct Real Property
- Florida Department of Revenue: Sales and Use Tax on Construction, Improvements, Installations and Repairs
- Florida Department of Revenue: Application to Collect and or Report Tax in Florida
- Florida Department of Revenue: Discretionary Sales Surtax Information
- Florida Department of Revenue: Florida’s Discretionary Sales Surtax