Florida's Repeal of Sales Tax on Commercial Rentals (Effective October 1st, 2025)

As a business owner or commercial property owner in Florida, staying ahead of tax law changes is essential to optimizing your operations and avoiding unnecessary liabilities. Effective October 1, 2025, Florida has repealed the state sales tax on commercial rentals under section 212.031, Florida Statutes. This significant shift eliminates the 6% state sales tax (plus any applicable discretionary sales surtax) on rent or license fees for the use of real property in commercial settings. For owners of office spaces, retail outlets, warehouses, or self-storage facilities, this repeal presents opportunities for cost savings and streamlined financial management—but it also requires careful attention to transitional rules to ensure compliance.

What the 2025 Florida Commercial Rental Tax Repeal Covers

The repeal applies broadly to commercial rentals, meaning no state sales tax or surtax will be due on rental or occupancy periods beginning on or after October 1, 2025. This includes:

• Leases for commercial office or retail spaces
• Warehouse rentals
• Self-storage units
• License agreements for vending or amusement machines on real property

However, the change is not retroactive. Any rent or license fees for periods through September 2025 remain fully taxable, even if payments are received after October 1, 2025. For example, if a tenant delays payment for August 2025 rent until October, you must still collect and remit the 6% state tax plus surtax.

Certain transactions are explicitly excluded from the repeal and continue to incur sales tax under section 212.03, Florida Statutes:

• Transient rentals (living, sleeping, or housekeeping accommodations for six months or less).
• Parking or storage spaces for motor vehicles in lots or garages.
• Docking or storage for boats in marinas.
• Tie-down or storage for aircraft at airports.
  

If your portfolio includes mixed-use properties, prioritize reviewing leases to distinguish between repealed and ongoing taxable elements.
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What Property Owners and Lessors Need to Do

If you lease commercial real property, the repeal simplifies your tax obligations moving forward, but you must handle the transition meticulously to avoid penalties.

• Filing Returns: Continue filing sales and use tax returns for periods through September 2025, based on your filing frequency:
  

• Monthly filers: Submit for July, August, and September 2025.
• Quarterly filers: Submit for July–September 2025.
• Semiannual filers: Submit for July–December 2025 (but exclude non-taxable rent for October–December).
• Annual filers: Submit for January–December 2025 (excluding non-taxable rent post-September).

File even if no tax is due for the period. The Florida Department of Revenue (DOR) will automatically update your account status after processing these final returns.

• Late Payments for Prior Periods: If you receive rent for pre-October periods after the repeal date, report and remit the tax. Maintain detailed records of payment dates and occupancy periods to substantiate this.
  

• Account Closure: If your sales tax account is solely for commercial rentals, no action is needed to close it—the DOR will handle updates. However, if your account covers other taxable activities (e.g., sales of tangible personal property), continue regular reporting.
  

• Estimated Tax Payments: No estimated payments are required for October 2025 onward if your account is commercial-rental-only. For mixed accounts, maintain your standard payment schedule.
  

• Record Retention: Retain books and records for at least three years under section 95.091(3), Florida Statutes. This includes lease agreements, payment receipts, and tax filings to support any audits or refund claims.
  

As a practical tip – you should audit your current leases now. Identify any prepaid rents for post-September periods that may have been taxed prematurely, and prepare to issue refunds where applicable. This proactive step not only ensures compliance but also strengthens tenant relationships by demonstrating transparency.

What Tenants Should Know: Refunds, Credits, and Next Steps

As a tenant in commercial space, the repeal reduces your ongoing costs. As for overpayment of taxes, you need to take proactive steps to recoup this money.

• Prepaid Rent: If you paid rent (and tax) in advance for periods starting October 1, 2025, or later—such as October–December 2025 paid in June—you are entitled to a refund of the sales tax portion. First, request the refund directly from your landlord. Once refunded, the landlord can file for reimbursement from the DOR using Form DR-26S (Application for Refund – Sales and Use Tax), including proof of your refund.
  

• Scholarship Funding Tax Credits: No new credits under the Florida Tax Credit Scholarship Program will be issued for commercial rentals after July 1, 2025. Use any existing credits against taxes due through September 2025.
  

• Direct Pay Permits: If you hold a direct pay permit for self-accruing sales tax on leases, the repeal applies equally—stop accruing tax for periods beginning October 1, 2025.
  

• Refunds for Overpayments: For any unused estimated tax credits or erroneous payments, submit Form DR-26S with supporting documentation. File online at floridarevenue.com/taxes/refunds for faster processing.
  

Frequently Asked Questions About Florida's Sales Tax Repeal

Drawing from the DOR's guidance, here are answers to frequent questions tailored to your perspective as a business or property owner:

• What if a tenant pays late for a pre-October period? Collect the tax and remit it. Delays don't eliminate liability—document everything to protect against disputes.
  

• Can I stop collecting tax on booth rentals in my salon or similar setups? Yes, for occupancy periods starting October 1, 2025, but collect for through September.
  

• Will discretionary surtax still apply? No, the repeal covers both state tax and surtax.
  

• How do I handle penalties for past late returns? Resolve them promptly online at https://taxapps.floridarevenue.com/taxregistration to avoid enforcement. The repeal doesn't cancel existing liabilities.
  

• What about vending machine licenses on my property? License fees for periods post-September are tax-free.

For unresolved questions, contact DOR Taxpayer Services at (850) 488-6800 or fdortaxpayerservices@floridarevenue.com.

How to Move Forward with Confidence: Strategic Considerations

This repeal is a welcome relief amid rising operational costs, potentially freeing up capital for reinvestment in your business or property. However, the highest priority is ensuring a smooth transition: Update your accounting systems, communicate changes to tenants, and verify compliance with all filing deadlines.

If your operations involve complex leases or multi-tenant properties, personalized legal review can prevent oversights. At Munizzi Law Firm, we specialize in guiding Florida business owners and property investors through such changes with tailored strategies that balance compliance and growth.

Contact us today to discuss how this repeal impacts your specific situation and explore opportunities it creates.

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