As a Board-Certified attorney in Real Estate Law by the Florida Bar, Howard Allen Cohen was invited to speak on Legal News and Review, a radio broadcast hosted by Charles Morehead III, President Elect of the Broward County Bar Association, and Gary Singer. Radio listeners hail from Ft. Lauderdale, Palm Beach, West Palm Beach and Jupiter, Fla., as well as nationally on iHeart HD radio.
Cohen described a tax code issue that is unique to Florida, as the only state that has a sales tax on commercial leases. Specifically, if business owners own their offices but lease it out to themselves, they have to pay sales tax.
“Another aspect of this that is very interesting and surprising to people is that you could be paying taxes on top of taxes,” said Cohen. “Typically in a commercial lease, the landlord will make the tenant pay the real estate taxes, the insurance premiums that the landlord incurs, common area maintenance and common expenses for the building. Anything that the tenant is paying that is considered the landlord’s responsibility is considered rent. So that means there is going to be sales tax on top of all of those things, including the real estate taxes. So the tenant is paying taxes on top of the real estate taxes.”
He noted that Florida’s Governor Scott has proposed a one billion dollar tax reduction for the state, which would include a reduction of this real estate tax by 1 percent. A state Senate Bill that would accomplish this has passed the Finance and Tax Committee and is now before the Appropriations Committee. Another bill is pending in the House that would grant a deduction of $10,000 per year from taxable commercial rent, increasing $10,000 each year until the tax was totally eliminated in 2015.
Cohen also described his work with property owners who have not had the legal right to access their own property because the roads in front of the property were not public roads. If the owner would later try to sell or mortgage it, it could render the property unmarketable.
“Although this problem is more prevalent in the rural communities such as Brevard County, where a lot of the case law comes from, I’ve had at least three cases representing property owners and their title insurers in defending these kinds of cases, and we’ve been able to settle each one of them and get them access…after we demonstrated that we’re going to win them anyway,” said Cohen.
Finally, Cohen was asked to talk about environmental remediation issues that might affect the new owner of a property if the property previously had environmental contamination.
“In buying any type of commercial property, it’s really important to do proper due diligence, and that’s going to include getting what’s called a Phase 1 Environment Assessment,” said Cohen, noting that a federal law called CERCLA allows the new owner some protection if the due diligence showed that there were no environmental issues with the property.
“If an environmental problem is discovered later, [the owner] can claim an innocent owner defense. He can’t do that if he hasn’t done any due diligence.”
Listen to the broadcast, which aired on WBZT 1230am Radio and iHeart HD Satellite Radio on Friday, February 10 at 6:00 p.m.