News Alert: Florida Repeals Sales Tax on Commercial Rent, Effective October 1, 2025

 Effective October 1, 2025, leases, licenses, or rentals of commercial real estate in Florida will no longer be subject to state sales tax or applicable county discretionary surtax, following the repeal of Fla. Stat. § 212.031 through HB 7031, which was signed into law on June 30, 2025. Florida will now align with the rest of the country, as no other U.S. state imposes sales tax on commercial rent. After years of phased rate reductions, this repeal marks the complete elimination of the tax.

Key Takeaways on Sales Tax

• Intercompany Rent: Entities with internal lease arrangements, such as between parent and subsidiary, will no longer need to charge or remit sales tax on those rents.

• Ground Leases: These will no longer be subject to sales tax starting October 1, 2025.

• Commission-Based Licensing Arrangements: Transactions involving shared revenue, including concessionaire and vending agreements, will no longer be treated as taxable license fees for the use of commercial space.

• No Impact on Hotel, Short-Term, or Parking Rentals: The repeal does not affect the sales tax imposed under Fla. Stat. § 212.03 on transient accommodations, including hotels, motels, vacation rentals, or parking and docking spaces. Sales tax will continue to apply to these transactions.

Audit and Compliance Considerations

The Florida Department of Revenue (FDOR) can audit sales and use tax returns for up to three years. While the tax goes away for transactions occurring on or after October 1, 2025, prior-period exposure remains. Businesses should maintain documentation for past rent payments and ensure accurate reporting through the final return periods.

Starting with the October 2025 return, sales tax on commercial rent should no longer be reported on Line C of the DR-15 Sales and Use Tax Return. We expect FDOR will revise the DR-15 form accordingly.

Timing of Rent Payments

There may be guidance coming from FDOR regarding payments made after October 1 for prior rent periods. Historically, FDOR has stated that rent paid in a later month is taxable based on the period it covers, not the payment date. However, since the statute currently states tax is not due until rent is received, any future guidance that contradicts this could be subject to legal challenge or require further clarification.

Here to Help

If you have any questions, we are here to help. We build value-added relationships with each client to understand their business structure and provide solid solutions. Our approach offers direct access to the firm's decision-makers. Our innovative cross-functional services help businesses address the challenges ahead.