Florida lawmakers have passed HB 7031, a bill that—if signed by Governor Ron DeSantis—would eliminate the state sales tax on commercial property leases.
Currently, commercial leases are subject to a 2% state sales tax (down from a general rate of 6%), plus local option taxes of 1%–1.5%, resulting in a combined rate of 3%–3.5%. HB 7031 would fully repeal both the state and local portions of the tax, rather than just reduce them further.
Effective Date
The repeal is scheduled to take effect October 1, 2025. However, because the tax is based on the period of occupancy, any rent paid in advance for time after that date will not be subject to tax, even if paid before October.
What’s Still Taxable
Certain rentals remain taxable. The bill only repeals Section 212.031 of the Florida Statutes, which governs commercial real property leases. Taxes will still apply to:
Short-term residential rentals (less than six months unless under written lease)
- Parking spaces
- Boat slips
- Aircraft hangars
These remain taxable under Section 212.03.
Pre-Repeal Occupancy Still Taxable
Sales tax remains due on any rental payments covering occupancy before October 1, 2025, regardless of when payment is made. For example:
- If a tenant pays August and September 2025 rent after the repeal date, those payments are still taxable.
- If a tenant owes additional rent (e.g., due to increased property taxes for a prior period), the portion related to pre-October 1 occupancy is still taxable.
Watch Out for Successor Liability
Even after the repeal, buyers of commercial property should still be cautious. The Florida Department of Revenue has three years to audit past tax returns and assess any unpaid taxes. This creates potential successor liability for new owners.
To mitigate this risk, buyers should ensure the seller obtains a certificate of compliance from the Department. Note: If a seller stops filing tax returns after October 1, the Department may refuse to issue a certificate. To avoid this, property owners are advised to continue filing “zero” returns even after the repeal.
Equipment Rentals Still Taxable
The repeal does not apply to rentals of tangible personal property. For instance, if a warehouse lease includes a separate charge for a forklift, that charge remains subject to sales tax.
Soource: The National Law Review
