Florida Eliminates Commercial Rent Sales Tax: What Businesses Need to Know

Florida’s elimination of the commercial rent sales tax (effective Oct. 1, 2025) represents a major shift for landlords and tenants alike, removing a longstanding cost while introducing new compliance requirements. Understanding the precise timing, exceptions and filing obligations tied to this repeal is essential to avoid missteps and secure potential refunds.

The basics

Florida has enacted House Bill 7031, which formally repeals the state sales tax imposed on rent or license fees for the use of real property (commercial rentals) under section 212.031, Florida Statutes. According to Tax Information Publication TIP 25A01‑04, issued July 24, 2025, this repeal applies to both the state rate (2%) and any discretionary local sales surtax.

The repeal becomes effective for occupancy periods beginning Oct. 1, 2025, and taxability depends on the rental period (as opposed to the payment date). If your lease or rental period starts on or after that date, no state or local discretionary sales tax is due for that period. However, rent or license fees for occupancy periods through Sept. 30, 2025, remain taxable, even if the payment is made after Oct. 1. For example:

• A tenant pays October rent in September for an October occupancy period. That payment it is not taxable.
• A tenant pays August rent in October. That payment stays taxable.

You can find detailed examples and compliance scenarios in the Florida DOR’s official guidance.

What the repeal does not cover: Taxable exceptions to know

While the repeal of sales tax on commercial rent is broad, it does not apply to every type of real property rental. Several categories of rentals remain fully taxable under Florida law.

The following remain subject to sales and discretionary surtax:

• Transient rentals – This includes leases or rentals of lodging (such as hotel rooms, vacation rentals, or corporate housing) for periods of six months or less.
• Parking or storage for motor vehicles – Tax still applies to rented spaces in garages or surface lots.
• Boat slips and docking/storage – Marina docking fees and similar arrangements remain taxable.
• Aircraft storage – This includes tie-down or hangar fees at airports.

These exclusions reflect Florida’s long-standing distinction between commercial tenancy and temporary or specialized use of real property. If your organization provides any of these services, you must continue collecting and remitting tax under standard guidelines.

In addition, Florida’s Tax Credit Scholarship Program stopped allocating credits for sales tax on commercial rent as of July 1, 2025. Businesses that previously contributed to the program through rent-related tax credits may use existing credits on rent paid through Sept. 30, 2025. However, no new credits will be issued after that cutoff.

Refunds and transitional rules: what to check now

Organizations may qualify for refunds if they collected sales tax on rent payments for occupancy periods beginning Oct. 1 or later and remitted that tax to the Department of Revenue. First, you’ll need to refund the tax directly to the tenant for the overpaid amount. The DOR requires proof of that refund.

Then file Form DR‑26S (Application for Refund – Sales and Use Tax) and include documentation showing the tax was refunded to the tenant. Refund claims can also be submitted online through the Florida DOR website.

Rent collected after Oct. 1 for periods prior to Oct. 1 must still be reported, remitted, and taxed. Even if your sales tax account is closed, that does not excuse the obligation to handle pre‑October tax periods accurately. (There’s no obligation to pursue a refund if tax was properly collected and remitted for periods through Sept. 30, 2025, per DOR guidance.)

Sales tax account closures: What landlords need to monitor

The Florida DOR will automatically close sales tax accounts that were used exclusively for reporting commercial rental tax. There’s no requirement to manually request a closure. However, this will only occur after the taxpayer files all final returns that include taxable periods.

The timing depends entirely on the taxpayer’s filing frequency:

• Monthly filers must submit July, August and September 2025 returns.
• Quarterly filers must file for Q3 2025.
• Semiannual and annual filers must include only the months where taxable rent was received (rent for October through December should not be reported).

Businesses that report other types of taxable activity (like tangible goods sales or short-term lodging) will not have their accounts closed, since they remain subject to Florida sales tax. These taxpayers should continue filing as usual.

The Department’s TIP 25A01‑04 and Sales and Use Tax Return Instructions both emphasize that returns must be filed even when no tax is due for the period. Failure to file could result in penalties or delays in account closure processing.

Handling late payments and record retention requirements

One of the more nuanced consequences of the repeal is how Florida handles rent received after the repeal date for periods that were still taxable. Landlords or property managers who collect rent after Oct. 1 for any occupancy period prior to that date must still collect and remit sales tax, just as they would have before the repeal.

Further, Florida law requires that businesses retain adequate records for a minimum of three years. This applies to all taxpayers, including those whose accounts have been closed. Under section 95.091(3), Florida Statutes, records must be available for review by the DOR in the event of an audit.

We strongly recommend that businesses retain:

• Lease agreements
• Rent payment records
• Proof of tax collection and remittance
• Refund documentation (where applicable)

For businesses preparing for a potential audit or seeking help with documentation, James Moore’s tax team provides specialized assistance to ensure compliance across all transactional areas.

Clarifying responsibilities: Avoid costly missteps post-repeal

Florida’s repeal of the commercial rent sales tax provides relief, but it’s not without complexity. The transitional period requires careful attention to timing, payment periods, account status and recordkeeping obligations.

The DOR has issued clear direction that final tax returns must be filed, even if no tax is owed. Rent for October and beyond should not be reported, but rent received for any prior period remains fully taxable.

The burden of proof in audits, refund requests and late remittances rests with the taxpayer, Businesses risk errors, penalties, or missed refund opportunities if they don’t have comprehensive documentation.

We’re advising our clients to evaluate whether:

• They over-collected tax for post-repeal periods
• They need to apply for a refund using Form DR‑26S
• Their account closure timeline aligns with their filing frequency
• Their current leases or systems need updates to stop applying sales tax starting Oct. 1

For further help navigating these issues and understanding ongoing filing duties, James Moore’s tax professionals are available to guide you through the closeout process with clarity and confidence.

Florida’s commercial rent tax repeal: Action steps for October and beyond

The repeal of Florida’s commercial rent sales tax marks a permanent shift in how businesses handle leasing transactions, sales tax compliance and tenant billing. However, this does not mean sales tax obligations disappear entirely.

If you’re unsure how this affects your tax position, refund opportunities or reporting obligations, we can help. Contact a James Moore professional for tailored guidance and support. From refund processing to audit defense, our tax advisors are here to ensure you’re positioned correctly as this change takes effect.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.