In a landmark move for Florida’s commercial real estate sector, the state legislature has officially repealed the sales tax on commercial leases, effective October 1, 2025. This long-anticipated change, enacted through House Bill 7031, eliminates both the state-level 2% tax and the local option surtaxes that have historically applied to commercial rental payments.

 What’s Changing?

For decades, Florida stood alone as the only state to impose a sales tax on commercial rent. That ends this fall. Starting October 1, landlords will no longer be required to collect sales tax on rent for commercial properties such as office buildings, retail spaces, and industrial facilities.

However, it’s important to note that this repeal only applies to commercial real property leases. Other types of rentals, such as short-term residential stays, vehicle parking, boat slips, and aircraft hangars, remain taxable under separate provisions of Florida law.

 Timing Matters

The repeal is tied to the period of occupancy, not the payment date. This means:

• Rent paid before October 1 for occupancy after October 1 is not taxable.
• Rent paid after October 1 for occupancy before October 1 is still taxable.

Landlords and tenants should carefully review lease terms and billing cycles to ensure compliance during this transition.

 Successor Liability Still Applies

Even after the repeal takes effect, buyers of commercial property must remain vigilant. The Florida Department of Revenue retains the authority to audit and assess unpaid sales tax liabilities for up to three years. To avoid inheriting a seller’s tax debt, purchasers should continue to request a certificate of compliance from the seller.

 Filing Zero Returns

Landlords who no longer owe sales tax after October 1 may still want to file zero returns with the Department of Revenue. Doing so preserves their ability to obtain a certificate of compliance in future transactions.

 Equipment Rentals Still Taxable

If a lease includes separate charges for equipment, such as forklifts or machinery, those charges remain subject to sales tax as tangible personal property rentals.

At Gulati Law, we’re here to help landlords, tenants, and investors navigate this significant shift in Florida’s commercial real estate landscape. Whether you need assistance updating lease agreements, reviewing compliance obligations, or planning for future transactions, our team is ready to guide you.

 Contact us today to ensure your commercial real estate strategy is aligned with the latest legal developments.