Was the entire 29,156-square-foot lease of an assisted living facility exempt from Florida real-property rental tax?

Plain-English summary

This revised TAA corrected an earlier factual record. The tenant leased 29,156 square feet of a 30,000-square-foot building for a 32-bed assisted living facility; a separate 844 square feet was leased to an office and salon and was outside the ruling.

Within the tenant's lease were residential rooms, care and office areas, a clubhouse, laundry, activities room, library, kitchen, fitness and physical-therapy rooms, and a card room. Some common areas were also available to residents of nearby condominiums.

Florida ruled that the tenant's entire rent was not subject to sales tax. All 29,156 leased square feet contributed to residential units for aged residents or their care, so no taxable mixed-use allocation remained under the submitted figures and floor plans.

What this means for you

Common and recreational areas can remain part of an exempt assisted-living lease when they contribute to resident care, even if others have limited access. The analysis still depends on documented space and actual use.

Common questions

What percentage of the tenant's lease was exempt? 100%.

Did condominium residents' access make the common areas taxable? No, under the stated facts.

Did the TAA cover the separate office and salon space? No.

Citations and references

• Fla. Stat. §§ 212.03 and 212.031 and Fla. Admin. Code r. 12A-1.070, as quoted or discussed in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 10A-037R

Original ruling text

SUMMARY
QUESTION: What percentage of a 29,156 square feet lease of an assisted living facility used to
provide care for its residents is exempt from sales/use tax?
ANSWER: Section 212.031(1)(b), F.S., provides that “[t]he portion of the premises leased or rented
by a for-profit entity providing a residential facility for the aged will be exempt on the basis of a pro
rata portion calculated by combining the square footage of the areas used for residential units … and
dividing the resultant sum by the total square footage of the rented premises….” Based on the figures
and floor plans provided, the entire lease is not subject to sales tax.
September 27, 2010
XXX
Re:

Subject: Technical Assistance Advisement 10A-037R
Sales and Use Tax – Real Property Lease: Assisted Living Facility
Section 212.031(1), Florida Statutes (F.S.)
Rule 12A-1.070, Florida Administrative Code (F.A.C.)
XXX (Taxpayer)
FEI #: XXX

Dear XXX:
This is in response to your letter dated XXX, requesting this Department’s issuance of a Technical
Assistance Advisement (“TAA”) pursuant to section 213.22, F.S., and Rule Chapter 12-11, F.A.C.,
concerning the taxable portions of a real property lease. An examination of your letter has established
you have complied with the statutory and regulatory requirements for issuance of a TAA. Therefore,
the Department is hereby granting your request for a TAA.
Issue
What percentage of a 29,156 square feet lease of an assisted living facility is exempt from sales/use
tax?
Facts
This revision is to correct facts in TAA 10-037. It has come to the Department’s attention that 844
square feet of the building is separately leased by Taxpayer to third parties, and is not part of the lease
to XXX (Tenant).
Taxpayer, the lessor, leased an assisted living facility on April 1, 2010, to Tenant. The leased property
consists of a 30,000 square foot two-story building. However, Tenant only leased 29,156 square feet
of the building, because 844 square feet of the building is leased to an office and a salon pursuant to
separate leases with other tenants. The building consists of a thirty-two-bed assisted living facility, a
private clubhouse, a laundry area, an activities room, a library, a kitchen, and combined office space
used for the assisted living facility, consisting of 22,921 square feet. This TAA addresses only the
lease between Taxpayer and Tenant.

Technical Assistance Advisement
Page 2 of 3
The lease provides that Tenant is to allow residents of two nearby condominiums use of its laundry
area, activities room, library, kitchen, fitness center and physical therapy room, and card room. 6,235
square feet of the building are used and operated by Tenant as a private clubhouse and recreational
facility for the assisted living facility residents and the residents of the condominiums.
Requested Advisement
Taxpayer requests that the Department determine what portion of the 29,156 square feet lease of the
assisted living facility is subject to sales tax.
Applicable Authority and Discussion
The Department has not verified the square footage of the figures that were provided. This response is
regarding the methodology you are using to calculate the taxable portion of the Taxpayer’s lease
agreement.
Section 212.031(1)(a), F.S., imposes sales tax on the privilege of engaging in the leasing of, or the
granting of a license to use, real property, with specified exemptions. Subparagraph 2. exempts the
lease of real property “[u]sed exclusively as dwelling units.” Properties that are used as dwelling units
are taxed under Section 212.03, F.S. Section 212.03(7)(a) [last sentence], F.S., provides that the tax
“shall not apply to or be imposed upon or collected on the basis of rentals to any person who resides in
any building or group of buildings intended primarily for lease or rent to persons as their permanent or
principal place of residence.” In this case, Taxpayer entered into the lease primarily to lease or rent the
rooms to seniors and to provide the seniors with various services.
Section 212.031(1)(b), F.S., provides the following in part:
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)2., … 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. The portion of the premises leased or rented by a for-profit
entity providing a residential facility for the aged will be exempt on the basis of a pro rata
portion calculated by combining the square footage of the areas used for residential units by the
aged and for the care of such residents and dividing the resultant sum by the total square
footage of the rented premises…. (Emphasis Added.)
The following equation is a reasonable method useful for calculating the taxable portion of a lease
payment under a lease for multiple-use property:
Total rent or license fee * Taxable square footage
= Taxable rent
Entire square footage of the lease
In this case, the total leased space is 29,156 square feet, and the entire space is used as part of the
assisted living facility. Although the club house, kitchen, laundry room, and library are also used by
the condominium residents, these components are still necessary to provide a dwelling “befitting those
persons who, by their unfortunate physiological or cognitive deficiencies, necessarily require a more
complete support base …. [A]reas not used exclusively for special care and attention of patients cannot

Technical Assistance Advisement
Page 3 of 3
be apportioned for ‘multiple use’. Rather, these areas all contribute to the ultimate care of the
residents in their unfortunate state of declining health.” See Beverly Enterprises-Florida, Inc. v.
Florida Department of Revenue, 18th Judicial Circuit, No. 94-2259-CA-16-L (1996). Because the
entire leased area is used by Tenant as an assisted living facility, the rent paid by Tenant is not subject
to sales tax under Section 212.031(1)(b), F.S.
Conclusion
Based on the figures and floor plans provided, the rent paid by Tenant is not subject to sales tax,
because Tenant utilizes the entire leased property as residential units by the aged and for the care of
such residents.
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 advice is based, may subject similar
future transactions to a different treatment than that 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 15 days of the date of this letter.
Sincerely,

Angel Sessions
Senior Tax Attorney
Technical Assistance and Dispute Resolution
(850) 922-4708
Record ID: 89071