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Florida Repeals Commercial Lease (Business Rent) Tax: What You Need to Know

What Is Being Repealed?

• The repeal removes Section 212.031, Florida Statutes, which currently imposes a sales tax on leases or license fees for the use of commercial real property (office, retail, warehouse, industrial, storage, etc.).
• Both the state tax rate (which had been reduced to 2 %) and the local discretionary surtax portion (typically counties’ additional tax on top of the state rate) will be removed for commercial real property leases.
• Once effective, no further sales tax will be collected on rent payments for occupancy periods beginning on or after October 1, 2025.

What Stays Taxable (What the Repeal Does Not Affect)

• Short-term residential rentals (leases of residential property for six months or less) and transient lodging remain taxed under different statutes.
• Parking facilities, boat docking or slip rentals, aircraft hangars, and similar property use remain subject to tax under other tax sections (e.g. Section 212.03).
• Rental or lease of tangible personal property (equipment, machinery) continues to be taxable under sales tax rules for personal property, separate from real property.

Effective Date and Transition Rules

• The repeal takes effect October 1, 2025.
• For lease or occupancy periods that begin on or after October 1, 2025, no sales tax should be charged.
• For occupancy periods that end before the effective date (i.e. September 30, 2025 or earlier), tax remains due—even if the payment is made after October 1. For example, if rent for September is paid in October, that portion is still taxable.
• If a lease spans the transition (e.g. monthly rent covering part of September and October), the rent must be prorated: only the portion attributable to pre‑October uses will be taxed; the portion attributable to post‑October use is exempt.
• There is no blanket automatic refund of taxes already paid for periods after October 1, but landlords may need to adjust invoicing or seek refunds or credits through the Department of Revenue in appropriate cases.

Impacts & Benefits

For Tenants (Business Occupants)

• Lower cost of occupancy starting October 1, 2025, since rent and associated charges will no longer include commercial lease sales tax.
• Businesses can reallocate those savings (for example, toward operations, expansion, or investment).
• Reduced administrative burden, because tenants will not have to separately track and pay that tax component (for standard commercial leases).
• Lease agreements should be reviewed; language referencing “sales tax on rent” will need adjustment.

For Landlords and Property Managers

• Invoices, lease templates, accounting, and billing systems need to be updated to remove the tax component for qualifying leases.
• Landlords must ensure tax is still collected correctly for pre‑October 1 periods and any retroactive adjustments tied to those periods.
• Aggregate lease portfolios may become more competitive in pricing because tenants may value the tax savings.
• Landlords should alert tenants to the change and discuss how reconciliation or additional rent clauses will be treated under the new law.
• Even after the repeal, landlords should continue to file returns (i.e. zero‑dollar returns) to maintain compliance and preserve ability to get certificates of compliance where needed.

For Purchasers of Commercial Property

• The new owner should assess successor liability risk with regard to unpaid commercial rent tax by a seller for periods before October 1, 2025, because the Department of Revenue has auditing and assessment authority for a statutory window after filings.
• To mitigate that risk, acquiring parties typically request a certificate of compliance from the seller or insist on other protections in the transaction.

Things to Watch and Caveats

• Because the repeal is recent, implementation details and administrative guidance (from the Department of Revenue) may clarify ambiguous issues.
• Some lease clauses (for example, those that obligate tenants to pay “applicable taxes”) may require negotiation or amendment to remove references to commercial lease tax.
• Retroactive rent adjustments or lease modifications may need careful treatment to ensure tax is levied only on pre‑October occupancy periods.
• Landlords and tenants should maintain documentation and records (for several years) of tax treatment, reconciliations, and prorations for audit purposes.
• For leases in which additional charges (e.g., common area maintenance, insurance, property tax reimbursements) are treated as “rent” or pass‑throughs, tax treatment change may affect how those charges are presented and billed.

Conclusion & Next Steps