Florida’s Commercial Rent Sales Tax Repeal a Boon for Businesses

For business leaders, landlords, tenants, and attorneys both in and outside of Florida, the state’s recent sales tax repeal for commercial rents will reduce costs significantly and align the state with the rest of the country, where no such tax exists.

The law broadens the scope of tax relief by eliminating Section 212.031 of the Florida Statutes, which had imposed a 2% state sales tax, plus applicable local discretionary sales surtaxes, on rental payments for commercial real property.

Effective Oct. 1, no state sales tax or discretionary sales surtax will apply to rent or license fees for commercial rental or occupancy periods beginning on or after that date. This includes payments for commercial office or retail space, warehouses, self-storage facilities, and even license fees for vending or amusement machines.

Items that tenants pay on behalf of landlords, such as real estate taxes, insurance, common area maintenance charges, and utilities bundled into rent, no longer will be subject to sales tax when included in these payments.

By way of example, in a triple-net lease where a tenant reimburses the landlord for ad valorem property taxes, those reimbursements previously were taxable as part of the “rent” consideration. Post-repeal, they’re exempt.

The repeal isn’t absolute. Sales tax will still be due on payments for occupancy periods through Sept. 30, regardless of when the payment is made. Landlords and tenants must prorate charges for transitional periods.

What’s Still Taxed

While the repeal targets commercial rents specifically, Florida’s broader sales-and-use-tax framework under Chapter 212 remains intact. Businesses must keep collecting and remitting the standard 6% state sales tax (plus local surtaxes) on taxable transactions.

Several items are still subject to taxation in the commercial and real estate sectors, including transient rental, parking and storage fees, and certain tangible personal property and services.

If utilities are separately metered and billed directly to the tenant by the provider, they may be subject to sales tax as a separate transaction.

Benefits and Beneficiaries

Commercial tenants, who bear the economic burden of the tax through pass-through clauses in nearly all commercial leases, are the repeal’s primary beneficiaries.

By eliminating the 2% state tax and local surtaxes, tenants can expect savings of about 2.5% to 3.5% on total occupancy costs, depending on the county. This translates to substantial annual reductions for large-scale operations, such as retail chains or logistics firms, and can free up capital for expansion, hiring, or investment.

Landlords benefit indirectly, as lower effective rents make Florida properties more competitive, attracting new tenants and reducing vacancy rates.

The repeal is projected to cost the state nearly $1 billion in revenue but is anticipated to boost economic activity by making Florida more appealing for business relocation and growth.

For out-of-state investors and attorneys, the change levels the playing field by removing a Florida-specific hurdle in multistate real estate portfolios and encouraging cross-border transactions.

Broader economic impacts include enhanced affordability for small businesses, which often operate on thin profit margins, and stimulation of sectors such as retail and hospitality. Attorneys advising clients on lease negotiations should highlight these savings in drafting or amending lease agreements.

Practical Considerations

In Florida, sales tax is paid to the landlord, who then remits it to the Florida Department of Revenue. For seamless implementation, landlords must update invoicing systems to cease collecting tax on post-September 2025 periods, while tenants should verify reconciliations and seek refunds for any overcollections.

The FDOR’s Tax Information Publication TIP 25A01-04 provides guidance and specific examples: A tenant paying August 2025 rent in October remains taxable, while September prepayments for October are exempt.

Businesses with sales tax certificates solely for commercial rents must file final returns through September 2025, even if no tax is due, and the FDOR will automatically update accounts. Refunds for prepaid taxes must be handled tenant-to-landlord first, and records must be retained for three years.

Attorneys both in and outside of Florida should advise clients on implications, as the repeal doesn’t alter general sales tax obligations. For interstate businesses, this change simplifies compliance but underscores the need for vigilant tax planning.

Landlords should alert tenants to this change and remove Florida sales tax from rental and license fee invoices for commercial property tenants for all rent applicable to occupancy periods from and after Oct. 1. Attorneys and accountants should advise both landlord and tenant clients to make the appropriate rental payment, reporting, and tax remittance changes.

Landlords also should confirm their invoicing and payment systems are updated to remove sales tax from rent charges for occupancy after Sept. 30. The elimination will benefit landlords, once implemented, by reducing administrative complexity in lease management and billing processes.

Most commercial leases in Florida say tenants are responsible for payment of applicable sales tax to landlords. This language should be reviewed, longstanding lease provisions should be revisited, and contingencies should be made in existing and new leases in case a sales tax is ever imposed.

While this tax is repealed for today, the history of taxation often is the history of old taxes being abolished, with the potential of them reappearing later in other forms.Draft accordingly with foresight and vision.

Looking Ahead

Florida’s sales tax repeal for commercial rents strengthens its attractiveness as a business hub. Both landlords and tenants stand to benefit, with tenants realizing immediate tax relief.

While the repeal streamlines leasing processes and reduces overall costs, it also requires careful attention to transitional provisions and ongoing compliance obligations.

Attorneys, business owners, and property managers should promptly review lease agreements, update relevant systems, and counsel clients on navigating the new regulatory environment.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Daniel A. Kaskel is a partner at Sachs Sax Caplan, where he chairs the transactional law group.

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