San Francisco Commercial Rent Tax Information - Operative as of January 1, 2019

The ‘Early Care and Education Commercial Rents Tax Ordinance’ (Commercial Rents Tax) is operative as of January 1, 2019.

This tax generally applies to businesses leasing commercial space in the City and generally does not apply to businesses exempt from Gross Receipts and Payroll Expense Taxes.

In addition to the existing Gross Receipts and Payroll Expense Taxes, this measure imposes a new gross receipts tax of:

• 1% on the amounts a business receives from the lease or sublease of warehouse space in the City;
• 3.5% on the amounts a business receives from the lease or sublease of other commercial spaces in the City.

Commercial space is any building or structure, or portion of a building or structure, that is not residential real estate, as defined in section 954.1 of Article 12-A-1. For the purposes of this tax, commercial space does not include any building or structure, or portion of a building or structure, that is used for:

• Industrial Use, as defined in Section 102 of the Planning Code
• Arts Activities, as defined in Section 102 of the Planning Code
• Retail Sales or Service Activities or Retail Sales or Service Establishments that are not Formula Retail uses as defined in Sections 303.1(b) and 303.1(c) of the Planning Code

Businesses will file and pay the Commercial Rents Tax at the same time and in the same manner as the Gross Receipts and Payroll Expense Taxes. This includes making three quarterly estimated payments of the Commercial Rents Tax liability throughout the tax year.

The annual filing due 2/28/19 for Gross Receipts and Payroll Expense taxes will ask businesses to report their gross receipts from the lease of warehouse space and commercial space during tax year 2018. Estimated payments for tax year 2019 will be billed accordingly, subject to revision by taxpayers to reflect actual taxable gross receipts for that quarter. There will be no penalties for underpayment or late payment of the estimated taxes for the Commercial Rents Tax during tax year 2019.

Additional Information:

• Early Care and Education Commercial Rents Tax Credit and Exclusions: Credit for child care facilities. Exclusion of rents subject to hotel tax or parking tax.
• Article 21: Early Care and Education Commercial Rents Tax Ordinance
• San Francisco Business and Tax Regulations Code Sections 6.9-1 through 6.9-5 of Article 6for additional information on Determinations, Returns and Payments.

Please contact the San Francisco Office of the Treasurer & Tax Collector for additional questions by submitting a service request.