For 56 years, Florida was the only state in the US to tax commercial rent. As of October 1, 2025, that tax is gone. Landlords and investors now have a narrow window to capture this NOI shift.
Established in 1969, Section 212.031 of the Florida Statutes imposed a state sales tax on all commercial real property leases across Florida. From warehouses in Orlando to retail strips in Miami, every business was required to pay a percentage of their rent to the Department of Revenue.
In 2024, a major unemployment fund trigger accelerated the phase-out. On June 30, 2025, Governor Ron DeSantis signed HB 7031, permanently eliminating the state rate and all county discretionary surtaxes on commercial rent effective October 1, 2025.
The removal of this tax burden represents the single largest injection of liquidity into Florida's small and medium-sized business ecosystems in current history.
Historical rate trajectory 1969–2025
| PERIOD | STATE RATE | COMBINED | CONTEXT |
|---|---|---|---|
| 1969–2017 | 6.0% | 6.5–7.5% | Historical baseline |
| Jan 2018 | 5.8% | 6.3–7.3% | Initial reduction |
| Jan 2019 | 5.7% | 6.2–7.2% | Phase-out begins |
| Jan 2020 | 5.5% | 6.0–7.0% | Pre-pandemic |
| Dec 2023 | 4.5% | 5.0–6.0% | Post-pandemic relief |
| June 2024 | 2.0% | 2.5–3.5% | Unemployment fund trigger |
| OCT 2025 | 0.0% | 0.0% | FULL REPEALHB 7031 |
Distribution centers, small-bay flex, and cold storage leases are 100% exempt from rent tax starting Oct 1, 2025.
Storefronts, showroom spaces, and NNN retail leases previously paying 2.5–3.5% tax now pay $0 state/local lease tax.
Professional office, medical suites, and surgery centers see an immediate reduction in total occupancy costs.
Ground leases for hospitality or multifamily development also benefit from the removal of the 212.031 burden.
The immediate effect of the repeal is a reduction in gross occupancy cost for the tenant. In a Triple Net (NNN) lease — the standard for most retail and industrial deals in Central Florida — the tenant pays base rent plus their pro-rata share of taxes, insurance, and maintenance. Before October 2025, Florida's sales tax applied to this entire amount. That "tax on a tax" significantly bloated tenant budgets and suppressed achievable base rents.
In competitive submarkets with vacancy rates below 5% — including Orlando retail at 3.7% and Lake Nona medical office at approximately 4.0% — landlords now possess meaningful leverage to capture a portion of the tenant's tax savings through base rent increases. The math is straightforward: if a tenant's annual tax burden was $25,000, a $15,000 increase in base rent still represents a $10,000 net savings for the tenant, while permanently increasing the landlord's NOI.
The formula that drives this is the core of commercial real estate valuation:
This dynamic — operational savings converting directly into asset value — is the primary reason institutional capital is targeting Florida retail and industrial in the first half of 2026. The window to acquire before this repricing is reflected in asking prices is open now. It will not remain open indefinitely.
| Asset Class | Asking Rent PSF | Vacancy | Cap Rate | Capture Potential |
|---|---|---|---|---|
| Industrial/Logistics | $20–$22 | 7.2% | Stable/Compressing | Medium |
| Retail (Infill) | $30–$34 | 3.7% | Stable | HIGH |
| Medical Office | $28–$32 | 4.0% | Highly Stable | HIGH |
| Traditional Office | $25–$27 | 17.6% | Expansionary | Low |
| Multifamily (A) | $1,800–$2,000/unit | 8.7% | Stable/Improving | Medium |
Source: The List Orlando Research; Q1 2026 market estimates
The businesses paying Florida commercial rent have just received a permanent tax cut. The landlords in the right submarkets will capture a meaningful share of that value. The investors who buy before the market fully prices in this dynamic will capture the rest.
View Available Properties →The Florida Department of Revenue determines taxability based on the occupancy period, not the payment date.
If a tenant paid October 2025 rent in September, the tax is not due. If they pay December 2024 arrears in 2026, the tax remains due.
Use our diagnostic tool to check specific dates and counties for compliance.
With the BRT removed from the tenant's cost stack, NOI projections are meaningfully cleaner for lenders. Here's how the major loan products are being deployed in 2026 — and what DSCR benchmarks matter most.
Standard workhorse for $1M–$10M acquisitions. Post-repeal, improved NOI helps deals that were previously borderline on DSCR. Recourse. 20–25 year amortization typical.
Only 10% down. CDC portion carries a fixed 25-year rate 100–200 bps below conventional market. For owner-occupants, this is the single most powerful financing tool in Florida — and most investors never use it.
Non-recourse structure preserves personal balance sheet. Prepayment via defeasance or yield maintenance — model this before you commit. 27% increase in CMBS originations forecast for 2026 as market liquidity returns.
Interest-only structure for repositioning plays. Higher rate is acceptable when basis is right and a clear exit to conventional financing exists. The BRT repeal improves exit cap rate assumptions on stabilized retail and industrial assets.
The same property. Better NOI. Better lender terms. Better returns.
We were looking at industrial in Lake Nona for eight months with two other brokers. Nothing. Renan called on a Thursday with an off-market 14,400 SF deal and we closed in 34 days at $21.50 PSF. That property never hit CoStar. That's the difference between someone with actual relationships and someone refreshing LoopNet.
We were expanding to our third retail location and I expected the usual broker experience — a stack of listings, a few tours, and a commission grab. Instead we got a full market analysis, three scenarios with projected occupancy costs under the new rent tax environment, and a negotiation that landed us 5 months free rent plus $42/SF in TI. I didn’t know CRE worked this way.
Our family office was looking to redeploy $4M out of a 1031 in under 45 days. Renan had three replacement properties identified before our relinquished property even closed. We went from identifying to under contract in 12 days on a NNN retail strip in Kissimmee at a 6.8% cap. He knew every number before we asked.
Detailed answers to complex compliance questions