July 30, 2025
By: Paul S. Quinn, Jr.
Effective as of October 1, 2025, sales tax will no longer be due on most commercial real property leases, including office, retail, warehouse and industrial leases. The Florida legislature passed House Bill 7031, and the bill was signed by Governor DeSantis on June 30, 2025. The law is codified as Chapter 2025-208, Laws of Florida.
Elimination of Sales Tax on Most Commercial Rent
The new law eliminates sales tax on most commercial rent at both the state level and the local level, which was also known as the local option tax. Sales tax on rent continues to be due on commercial rents for the period of occupancy through September 30, 2025. The tax would continue to be due even for late rental paid after October 1st if the rent was for occupancy which pre-dated October 1st. Further, CAM reconciliations, or additional rent, imposed by a landlord but not billed until after October 1st would still be subject to sales tax if the additional rent was for the period of occupancy prior to October 1, 2025.
What is the Impact of the Elimination of Sales Tax on Rent?
The new law is estimated to save over $1 billion annually for Florida businesses. The sales tax on commercial rent – the only one in the nation – hit certain small businesses particularly hard when the ownership structure of the real property and the business located thereon was separated primarily for liability protection reasons. The elimination of the tax is a welcome relief for Florida business owners and tenants.
What Rent Payments Remain Taxable Under HB 7031?
The new law did not eliminate sales tax on commercial equipment leases. For example, if a medical office lease included the rental of specified tangible personal property, sales tax would continue to be due on such leased equipment and personal property.
The new law also does not repeal sales tax due on short-term residential rentals (leases of less than six months), parking facilities and garages, boat dock rentals, and aircraft hangar rentals.
How Should Landlords and Tenants Prepare for the Sales Tax Law Changes?
Landlords and tenants should carefully review their rental invoices and payments after October 1st to ensure that sales tax is not paid or remitted, as appropriate under the new law. Landlords may consider keeping sales tax provisions in Florida commercial leases in the event the sales tax on rent is reimposed in the future. The Florida Department of Revenue has published Tax Information Publication (TIP) No. 25A01-4 which provides additional information on the changes to the law.
Questions?
Contact GrayRobinson Shareholder Paul S. Quinn, Jr. or a member of the Real Estate and Land Use Team.