Florida just made history. On June 30, 2025, House Bill 7031 became law, erasing the long‑standing sales tax on commercial property rentals starting October 1, 2025. Until now, Florida was the only state that charged businesses a tax on rent. When that cost disappears, it creates new breathing room for owners and tenants alike. Below we explain what changes, when it changes, and how to turn this win into real‑world savings.

Why House Bill 7031 Matters for Florida Property Owners

Repealing the tax is more than a headline; it is a practical cash‑flow boost. Analysts expect the move to save businesses about $1.3 billion every year. That extra capital can fund build‑outs, pay down loans, or cover rising insurance premiums.

Florida landlords have long said the tax pushed renters toward Georgia and Texas. By bringing the rate to zero, the state removes a talking point competitors loved to highlight. Property managers can now negotiate leases with one less hurdle, and local entrepreneurs can open second locations without factoring in an automatic rent surcharge.

Sales‑Tax Timeline: From Six Percent to Zero

Lawmakers did not kill the levy overnight; they have chipped away at it for nearly a decade. Understanding that path helps everyone confirm the final switch‑off date and avoid billing mistakes.

When October arrives, any rental period that begins on or after the first of the month will be free of state and local rent tax. If a lease covers September and October in one invoice, only the September portion remains taxable. Clear language in your lease and on your invoice will keep auditors, and tenants, happy.

Checklist for Tenants and Landlords Before October 1

Preparing early keeps relationships smooth and books tidy. Start with a walk‑through of your documents, then tackle systems and communication.

First, read every lease line by line. Look for phrases like “Florida sales tax,” “rent tax,” or any percentages tied to rent. Mark them so you can make precise edits.

Second, update your accounting software or invoicing templates. Most platforms still carry a default two‑percent code. If you forget to remove it, you will either overcharge tenants or spend hours issuing credits.

Third, talk to the other side of the contract. Landlords should email tenants with an easy timeline and an example invoice. Tenants should confirm their landlord’s plan so no one is surprised in October.

Finally, file one last sales‑tax return for the September period. Keep copies of rent logs in case the Department of Revenue checks transition compliance.

These steps sound small, but together they prevent messy reconciliations later in the year.

How the Repeal Reshapes Cash Flow and Strategy

Losing the rent tax can feel like getting an unexpected pay raise. For tenants, monthly rent falls by the exact percentage that once went to the state. For owners, net operating income rises even if face‑value rent stays the same. That stronger NOI can push property valuations higher and widen refinance or sale opportunities.

Of course, extra cash disappears quickly if it has no plan. Consider using it to

• tackle deferred maintenance such as roof repairs or energy upgrades,
• build reserve funds for hurricanes and rising insurance costs,
• invest in tenant improvements to secure longer lease terms,
• or accelerate principal payments on adjustable‑rate loans.

Each option turns a tax break into a strategic advantage rather than short‑lived breathing room.

Other Tax Areas That Still Need Attention

House Bill 7031 removes the rent levy but leaves other real estate tax items untouched. Purchases of office furniture or computers remain subject to the regular sales‑tax rate. Lease assignments may trigger documentary stamp tax, and major build‑outs can bump up county property assessments. Local surtaxes tied to tourism or transit also survive.

In short, celebrate the repeal but keep your compliance radar on. A holistic view of taxes ensures one saving does not lead to an unexpected cost elsewhere.

How Watson & Associates Can Help

Big legislative victories feel great, yet they also create new paperwork. At Watson & Associates we have guided clients through every rate adjustment since the first cut in 2017. We can review leases, rewrite tax clauses, adjust your accounting software, and model the positive impact on property values. Our goal is to make sure Florida property owners and tenants enjoy every dollar the repeal releases while staying in full compliance with state rules.

If you’re ready to turn House Bill 7031 into real and lasting savings, reach out today! Let’s make a plan that fits your unique portfolio and business goals.