Florida Administrative Code
12 - DEPARTMENT OF REVENUE
12C - Corporate, Estate and Intangible Tax
Chapter 12C-2 - INTANGIBLE PERSONAL PROPERTY TAX
Section 12C-2.010 - Valuations

1. The lease payments to be valued do not include any amount for taxes, interest, insurance, repairs, maintenance, exclusive franchise or concession fees, costs of utilities, or similar charges required to be paid the lessor, and include only the amount paid by the lessee for the use of real or tangible property provided or owned by the governmental lessor, whether designated as a fixed sum, a percentage, or a variable amount.

2. If lease payments are nominal amounts, such as $1 or $10 per year, or the payments are significantly less than a fair market rental for the property, the annual fair market rent which would be paid by the lessee in the open market for comparable property under similar terms and circumstances will be the lease payment to be valued.

3. If payments required by the lease are based on some factor other than the passage of time, such as a percentage of sales or profits, the lease payment to be valued will be based on the average annual rent actually paid by the lessee in prior years, providing the amount so determined is not nominal or significantly less than the fair market rental for the property. The average annual rental used will be determined from the amounts paid by the lessee for a period not to exceed the previous five years. If the average so determined is nominal or is significantly less than fair market value for the property, the lease payment to be discounted will be the annual fair market rental for the property.

4. Otherwise, the annualized lease payment required under the lease is the amount to be valued. The valuation factors to be used are based on the Federal Reserve discount rate - Atlanta - on the last business day of the preceding year, plus one percent. Valuation Factor Tables determined by the Department based on that discount rate, plus one percent, are annually published in a Taxpayer Information Publication and posted to the Department's Revenue Law Library at www.floridarevenue.com.

5. The period for which the lease payments are to be valued is the number of years remaining under the lease, exclusive of renewal options, as of January 1 of the tax year. The year in which the lease will expire is to be considered a full year for the purpose of this rule.

6. If the final period for which the lease payment is to be valued is less than a year, the lease payment is to be valued using the 1 year value factor and the tax apportioned based on the number of months during the year that the lease is in effect.

1. Lessee makes $4, 000.00 annual payments to lessor that includes $1, 000.00 tax on a lease with 10 years remaining and the Federal Reserve discount rate - Atlanta - is 11%. The value of the lessee's interest is determined by discounting the net annual rent of $3, 000.00 for 10 years at 12%. This results in a taxable value of $16, 950.60.

2. A lessee has 10 years remaining on a percentage lease with an original term of 13 years and the Federal discount rate - Atlanta - is 11%. The lessee has paid $5, 000.00 in the first previous year, $6, 000.00 in the second previous year and $4, 000.00 in the third previous year. The value of the lessee's interest would be determined by averaging the prior payments of $5, 000.00, $6, 000.00, and $4, 000.00. The lessee's interest of $5, 000.00 would be discounted for 10 years at 12% or $28, 251.00.