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Williams Parker Obtains Tax Ruling: Leases of Nursing Homes and Assisted Living Facilities are Not Subject to Sales Tax

July 25, 2014 Business & Tax Blog Sales Tax

On behalf of a client, Williams Parker recently obtained a Technical Assistance Advisement from the Florida Department of Revenue (the “Department”) that leases of nursing homes and assisted living facilities are exempt from sales tax to a greater degree than currently provided in the Florida Administrative Code. Oftentimes, the operator of a senior living facility leases the real estate from another legal entity, which may or may not be related. In interpreting the statutory exemption for leases of residential facilities for the aged, the Florida Administrative Code provides that only the areas of a senior living facility that are accessed and used by residents (excluding, for example, the kitchen portion of a cafeteria and administrative office areas) are exempt from sales tax. However, a trial court opinion (from the 18th Circuit Court for Brevard and Seminole counties) held that all areas of senior living facilities (not just those areas accessed and used by residents) are exempt, except for those areas leased for separate commercial purposes, such as a portion of the facility leased to a bank or hair salon. The Technical Assistance Advisement obtained by Williams Parker (i) affirms that the Department will follow the holding of the trial court outside of the 18th Circuit, and (ii) extends the holding of the trial court to leases of equipment and other tangible personal property owned by the landlord and used by the operator of the facility, at least where the lease is silent regarding any separate consideration for the tangible personal property.

If you have any questions regarding the Technical Assistance Advisement or other questions regarding Florida taxes, please contact:

Michael J. Wilson