Sales Taxes on Florida Commercial Real Estate Leases End on Oct. 1st
Effective October 1, 2025, Florida is repealing the state and local sales tax on commercial real estate leases. This change, enacted through House Bill 7031, represents a significant shift in the state’s tax policy, making Florida the 49th state to eliminate this type of tax and bringing it in line with the rest of the country. This change is meant to reduce the cost of doing business and attract more investment to the state.
Here is a breakdown of what landlords need to know about this change:
- When the Change Takes Effect: The repeal is effective for rental or occupancy periods beginning on or after October 1, 2025. This is a critical distinction—the tax applies to the period of occupancy, not the date the payment is made. For example, if a tenant pays their September rent in October, the rent is still taxable. Conversely, if they pay their October rent in September, it is not taxable.
- What is Included: The repeal applies to the state sales tax (which was 2%) and any county discretionary surtax on commercial rentals, including rent for office buildings, retail spaces, warehouses, and self-storage units. It also applies to other charges required under the lease, such as common area maintenance (CAM) fees and property tax reimbursements.
- What is Not Included: The tax repeal does not apply to all rentals. Certain types of transactions remain taxable, including:
- Transient rentals, such as hotel or vacation rentals for six months or less.
- Rentals of parking spaces, boat slips, or aircraft tie-down/storage spaces.
- Rentals of personal property and equipment.
- Compliance for Landlords: Landlords must stop collecting sales tax from tenants for occupancy periods starting on or after October 1, 2025. It’s crucial to update billing and accounting systems to reflect this change. The Florida Department of Revenue will automatically update the status of accounts that were used only for commercial rentals after the final return for the period ending September 2025 is filed. Landlords should also be aware that they are still liable for any uncollected sales tax on rental periods prior to October 1, 2025.
What specific actions are you planning to take as a landlord to ensure a smooth transition with your tenants and billing systems?
