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Short-Term Rental Taxes in Florida

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All over the world, travelers are foregoing their hotel room keys and opting to stay in short-term rentals instead. Rental properties have popped up all over the Panhandle State, mainly because there are stunning beaches, fun cities, and stunning national parks in Florida. These reasons and more make the great state of Florida the ultimate vacation spot. 

 

It makes complete sense that property owners are taking advantage of this fact and transforming their once personal properties into short-term rentals for travelers. Renting out a home, apartment, or condo has proven to be a lucrative income generator for Floridians. But as everyone knows, new tax implications come along with a new income. 

The Legality of Short-Term Rentals in Florida

The first question on the minds of Florida residents is whether or not short-term rentals are legal. Renting out a property to vacationers is indeed legal, but there is a unique set of rules and regulations set by the Florida Department of Revenue. Part of the reason for the state government’s strict take on this is to allow for shared wealth among rental owners and hotels. 

Rentals seem to have taken over, and major hotel chains, as well as small mom-and-pop accommodations, have taken a serious hit. There’s no question as to why some travelers prefer to stay in a cozy short-term rental, but the government just wants everyone in the industry to play fair. 

 

Licensing Requirements for Short-Term Rentals in Florida

The first requirement for a property owner is to make sure that the rental can be considered as a short-term rental. According to the state government of Florida, this is the full definition of a short-term rental:

“Any unit or group of units in a condominium or cooperative or any individually or collectively owned single-family, two-family, or four-family house or dwelling unit that is also a transient public lodging establishment but that is not a timeshare project.”

Once the property fits the bill for short-term rentals, the next requirement is for the property manager or owner to obtain a license. To get this license, an application will be sent to the Florida Department of Business and Professional Regulation. Within this department, there is a division called Vacation Rental and Timeshare Project Licensing. 

Whether the property is located in Gainesville, Orlando, or Destin, applying for a license is a good idea. The only exception is for property owners who are not renting out an entire unit. The definition above states that a short-term rental is a public lodging. Anyone renting out a single room or single unit rather than an entire unit can slide by without a license.

 

Paying Taxes on Short-Term Rentals in Florida

After receiving the license, it is time to pay the tax that the state requires for operating a short-term rental business. Property owners renting to an individual or family for at least six consecutive months won’t have to collect tax from the renter. Any renters staying less than 185 consecutive days, though, will be required to pay the tax. 

At the moment, the state sales tax in Florida is 6% for short-term rentals. So every time a new guest makes a booking that is less than six months total, there needs to be tax collected. This is just the state tax, but there will sometimes be county taxes applied as well. It is important to fully understand the Florida tax laws not only in the state but also in the local jurisdiction. 

 

A Short-Term Rental Owner’s Guide to Collecting Taxes in Florida

Before any real estate taxes can be paid, a rental owner should fully understand the area’s tax compliance rules. The first thing to know is that if a home falls into the “short-term rental” category, a sales tax must be applied. Just like hotels, B&Bs, and motels, short-term rentals are money-making businesses. A bed is being provided in exchange for cash, so applying a “bed tax” is necessary. 

Some rental property owners feel as if they don’t owe the government anything, and perhaps they’ll be able to slide under the radar if the rental operation remains fairly small. This might work at first, but eventually fairly to comply with tax laws will catch up to these rental owners. The laws say that short-term rental owners are required to collect sales tax, and failure to abide by the law isn’t a good idea. 

 

Short-Term Rental Taxes in 3 Steps

  • Step 1: Government agency registration
  • Step 2: Begin collecting taxes from renters
  • Step 3: File sales tax return

The three steps above show just how easy it can be to file sales taxes for a short-term rental operation. Step 1 isn’t referring to obtaining a short-term rental license, but instead, it means registering with the proper tax authorities. Not only will rental owners need to register with the state, but also the local jurisdiction where the property is located. 

Step 2 is pretty self-explanatory; simply being collecting taxes from guests. The most common issue with this step is not a failure to collect taxes, but instead, it is mistakenly collecting taxes twice. For example, when a property owner utilizes OTA sites like Airbnb, the sales tax will already be applied to the payment. In this case, the property owner does not need to collect the state tax since it has already been done. 

Step 3 is simply to file the sales tax return. The state sales tax returns have three separate due dates (and local tax returns are typically due on the same day):

  1. Annually: Due the 20th of January
  2. Quarterly: Due the 20th of the month following the close of the quarter
  3. Monthly: Due the 20th of the month following the close of the filing period

Keep in mind that there is a lot of organization involved, especially if rental owners hope for their stress levels to remain at bay come tax time. Hiring a tax expert who understands things like country tourist development and tourist development tax will save a lot of time – not to mention stress – when filing short-term rental taxes. 

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