Ground Rent
Ground rent is the periodic payment for land use under a ground lease, typically 6-10% of the land's fair market value annually. In Florida, commercial ground rent is subject to the 5.5% state sales tax plus county surtax.
How It's Determined
- Land value appraisal (bare land FMV)
- Capitalization rate applied (6-10%)
- Market comparison for similar properties
- Negotiation between landowner and tenant
- Escalation: CPI, fixed %, or FMV resets
Tax Treatment
- Deductible as business expense (IRC §162)
- Land purchases are not depreciable (ground rent advantage)
- FL has no state income tax (federal deduction only)
- 5.5%+ sales tax on FL commercial rent offsets benefit
Related Terms
- Estate for Years — Ground lease term
- Encumbrance — Ground lease obligation
- Contract — Lease terms
Barnes Walker Commercial Real Estate
Barnes Walker's attorneys negotiate ground rent terms and escalation provisions for Florida ground leases. Request a legal inquiry for assistance.
Florida Law Reference
Fla. Stat. Ch. 83, Part II
The Florida Residential Landlord and Tenant Act governs lease agreements, security deposits, maintenance obligations, and the eviction process.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC