Sales Tax 101 for Florida Rental Property Owners
- Sales Tax
- November 5, 2015 | Stephanie Faris
The vacation rental market is booming, especially in Florida. A rental property can be a wise investment in this state of endless beaches, bringing in recurring income for many years. Whether you plan to maintain the property yourself or hire a management firm, you can still enjoy thousands of dollars a week in rental fees.
But as you'd expect, rental property owners must pay a portion of the money they make to the government. Under Florida law, any property deemed a “transient accommodation” qualifies for sales tax. Transient accommodations include hotels, condos, timeshares, beach houses, cottages, apartments, and similar dwellings where temporary rentals take place.
Florida has a statewide basic 6 percent sales tax. Some areas of the state add on a local sales tax of as much as 1.5 percent, which can take the tax in an area up to 7.5 percent. Some form of local sales tax is tacked on in 55 of Florida’s 67 counties, making it a likelihood for any rental property owner.
In addition to sales taxes of up to 7.5 percent, some local areas enact a discretionary sales surtax, which allows local governments to add a sales tax onto the existing sales tax rate for certain purchases. The discretionary surtax varies by county but ranges from 0.5 percent to 1.5 percent. Rental property owners should pay sales tax based on the rate in the county where a property is located, even if the rental fees are collected in a different county or state.
There are some exemptions to the transient accommodations law, including property where a signed lease is in place for six months or more. If a transient renter decides to sign a lease after residing in the property and paying sales tax throughout, the sales tax exemption will kick in from the point the longer lease is signed. Rentals to full-time students and military personnel on assigned duty are also exempt from the sales tax usually charged on transient accommodations.
For property owners who lease space to trailer or recreational vehicle owners, rentals are taxable as long as more than half of the slots on a property are rented as transient accommodations. Once the number of full-time residents at the property reaches 50 percent or higher, the property owner is exempt from sales tax.
How to File
The process of paying sales tax on transient accommodations can get tricky in situations where multiple parties are involved in the leasing process. A property owner may hire a leasing agent to handle rentals and payments, leaving the property owner as someone who merely pays property taxes on the property. Under Florida state law, the person handling rentals and payments for a property is responsible for registering with the state to collect and pay taxes.
For property owners and rental managers who handle more than one property, the process is simple as long as all properties are located in one county. If transient accommodations are located in multiple counties, an application must be completed for each county in which properties are located. Property owners should complete a Florida Business Tax Application, and property managers, agents, and other parties acting on behalf of property owners should complete an Application for Collective Registration for Short-Term Rental of Living or Sleeping Accommodations.