On June 30, 2025, the Governor signed into law House Bill 7031, which among other tax relief provisions, eliminates sales tax on commercial real estate leases effective October 1, 2025. Florida was the last state to still impose this tax, which it has done since 1969. The rate of tax was equal to the rate of sales tax on other goods and services, but since 2018, it decreased until June of last year when it was reduced to 2% statewide. Many counties added a 1% local option tax to that, so tenants in many areas are paying a 3% tax on rent. Under the law, taxable rent included any expenses which the tenant was paying, in addition to the base rent for the use of the property.
This became even more troublesome when the property owner was an affiliate of the business operating on the property. This was often the case for liability protection or estate planning. The operating business was paying rent to the property owner, so many families wound up paying sales tax on rent they were paying to themselves or other family members.
However, as of October 1, 2025, commercial real estate rent will no longer be subject to sale tax in Florida. It is important for both tenants and landlords to update their billing and payment processes, as well as their new leases going forward.
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