A significant tax change is coming to Florida's commercial real estate landscape.
Effective October 1, 2025, businesses leasing commercial space in Florida would no longer be required to pay state or local sales tax on rent pursuant to a bill recently passed by the Florida Legislature. This long-anticipated change, introduced under House Bill 7031 and which must be signed into law by Governor DeSantis, brings substantial savings for tenants and simplifies billing and compliance for landlords and property managers.
With the repeal now on the horizon, it's important for all stakeholders to understand how this shift will affect their leases, payments, and administrative responsibilities.
What's included and what's not
The repeal applies to commercial real estate leases, such as office, retail, and industrial space. Rent for these properties will no longer carry sales tax as of the effective date.
However, some rental types remain taxable. These include boat slips , self-storage units, parking facilities, and short-term rentals like those offered through Airbnb, which are treated separately under Florida law .
Sales tax continues to apply to all commercial rent for occupancy through September 30, 2025, even if payment is made later.
What tenants should do
Businesses leasing space should review their lease agreements, particularly sections referencing sales tax. After the repeal takes effect, any mention of "applicable sales tax" in these agreements will no longer apply to commercial leases.
Rent invoices for periods beginning after the repeal's effective date should reflect the updated total. Businesses using automated payment systems should consider adjusting their settings to remove the tax portion. Subtenants should also be notified that tax will no longer be added to sublease payments.
The impact can be significant for many businesses. For example, a $10,000 monthly lease previously taxed at 2% would yield an annual savings of $2,400—resources that can be redirected into business operations or growth.
What landlords and property managers should do
Landlords must ensure their invoicing and payment systems are updated to remove sales tax from rent charges for occupancy after September 30, 2025. Billing templates, lease administration tools, and financial systems should be reviewed to prevent any erroneous charges.
After remitting sales tax collected through the final applicable period, landlords may choose to close their sales tax account with the Florida Department of Revenue if no other taxable activity exists.
A brief notice to tenants can help avoid confusion and reinforce clear, proactive communication. New leases covering periods beyond the repeal date should reflect the updated tax treatment. If desired, language may be included to address the unlikely event of future tax reimplementation.
Timeline and next steps
The bill is expected to be signed by Governor DeSantis by the end of June 2025. Stakeholders should monitor updates from the Florida Department of Revenue, which will likely publish new guidance ahead of the effective date. Preparing systems and communication plans in advance can help facilitate a smooth transition.
Moving forward
The removal of Florida's commercial sales tax on commercial real property leases removes a layer of complexity and cost from Florida's commercial leasing process. Taking action early can help maximize the benefits of the repeal and avoid unnecessary complications.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
