What Is Tangible Personal Property in Florida?
Understand the tax obligations for business assets in Florida. This overview covers property classification and the annual assessment and payment process.
In Florida, businesses and individuals engaged in certain activities are subject to a tax on their tangible personal property. This tax is distinct from real estate property taxes and applies to physical assets used for commercial purposes. Understanding what constitutes tangible personal property is an important step for compliance with state tax obligations. The tax is an ad valorem tax, meaning it is based on the assessed value of the property.
Defining Tangible Personal Property in Florida
Tangible personal property (TPP) is defined as all goods and other articles of value that can be physically possessed, seen, weighed, measured, or touched. This definition excludes real estate, which includes land and buildings. For example, the computer a company buys for its office is TPP, but the office building itself is real property.
Items classified as TPP include a wide range of business assets. Common examples are:
- Office furniture
- Machinery and tools
- Computer equipment
- Supplies not held for sale
- Any furnishings within a rental property
Leased equipment and fully depreciated items still used in the business are also considered TPP. The tax applies to property a business owns, leases, or lends if it is used for business purposes on January 1st of the tax year.
Conversely, several categories of property are not considered TPP for tax purposes. These exclusions include:
- Real property, which is taxed separately.
- Intangible personal property, such as stocks, bonds, patents, and accounts receivable.
- Inventory held for sale by a business.
- Household goods and personal effects, unless they are used in a business, such as the furniture and appliances provided in a furnished rental unit.
The Tangible Personal Property Tax Return
To report tangible personal property, businesses and individuals must use the Tangible Personal Property Tax Return, Form DR-405. Anyone who owns TPP on the assessment date of January 1st is required to file this return with their county’s property appraiser. This includes sole proprietorships, partnerships, corporations, and self-employed contractors. A separate return is required for each business location within a county.
Before completing the form, a filer must compile a detailed inventory of all TPP. This list should include a description of each item, the year it was acquired, and its original cost. The DR-405 form can be downloaded from the website of the local county property appraiser.
An exemption is available for up to $25,000 of assessed value. To receive this exemption, a business or property owner must file an initial DR-405 return by the deadline. If the total assessed value of the TPP is $25,000 or less, the owner will not owe any tax. After this initial filing, if the property’s value remains at or below the $25,000 threshold, the property appraiser may waive the annual filing requirement in subsequent years.
Filing the Return and Paying the Tax
The completed Tangible Personal Property Tax Return must be filed with the County Property Appraiser’s office where the property is located by the annual deadline of April 1. Filing after this date incurs penalties, which start at 5% of the total tax and can increase monthly up to a maximum of 25%. A complete failure to file results in a penalty of 25% of the tax levied.
After the return is filed, the County Property Appraiser assesses the value of the property. In August, the appraiser’s office mails a Notice of Proposed Property Taxes, often called a TRIM (Truth in Millage) notice. This document shows the property’s assessed value, any exemptions applied, and the proposed taxes based on the millage rates set by local taxing authorities.
The final tax bill is mailed on or before November 1st by the county Tax Collector, not the Property Appraiser. Payment is due by March 31st of the following year, with discounts available for early payments. If the taxes remain unpaid by April 1st, they become delinquent, and additional interest and fees are applied. The Tax Collector is responsible for collecting the tax and may issue tax warrants on delinquent accounts, which can lead to the seizure and sale of the property to satisfy the unpaid tax debt.