Florida has implemented significant tax reforms affecting commercial real estate leases. Through a phased approach commencing in 2024 and concluding in 2025, the state is systematically reducing and ultimately abolishing the sales tax on commercial property leases. The following overview outlines essential information for landlords, tenants, and brokers.
Overview of the 2024 Rate Reduction
Effective June 1, 2024, Florida reduced the state sales tax rate on commercial rent from 4.5% to 2.0%. While local discretionary surtaxes (which differ by county) remained applicable, this measure provided notable financial relief to tenants across office, retail, and industrial sectors.
2025 Sales Tax Repeal: Key Details
The most substantial change took effect on October 1, 2025 as Florida fully repealed the sales tax on commercial real property leases. As a result, no state or local surtax will apply to commercial rents for occupancy periods beginning on or after this date. This repeal encompasses:
It is important to note that rent attributed to occupancy prior to October 1, 2025, remains subject to taxation even if payment is made subsequently.
Categories Remaining Subject to Taxation
Certain types of transactions will continue to incur taxes, including:
Significance of the Changes
These legislative adjustments present opportunities for tenants to reduce occupancy expenses and enhance cash flow. Landlords may benefit from simplified billing processes and potentially increased competitiveness of Florida’s commercial real estate market at the national level. Stakeholders are encouraged to review lease agreements, update internal systems to accommodate the transition, and confirm proper tax treatment for lease terms covering the period of repeal.
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