Florida Tax Law Firm

Contact Us

We Offer a Free Case Evaluation

My Company is Under Florida Tax Audit
My Client is Under Florida Tax Audit
Florida Bank Account Has Been Frozen
Florida DOR is Just Being Unreasonable
How to challenge a FL tax assesment
Click here for Rules and Statutes Click here for Rules and Statutes
Florida Tax Law Lawyer Firm Overview Attorney Profile Practice Areas Resources Blog Contact Us
Select One:
Florida Tax Law
Why Hire the Law Offices of Moffa, Sutton, & Donnini, P.A.?
Florida Sales Tax Audit Defense
Florida Tax Audit
Florida Tax Litigation
Florida Tax Warrant / Lien
IRS Problems
For Attorneys
Criminal Sales Tax Defense
For Business Owners
For CPAs
Have A FL Tax Warrant?
Reverse Tax Audit
Selling / Buying a Business
State Tax Planning / Consulting
Types of FL Taxes
Your Business Under FL Tax Audit?
Your Client Under FL Tax Audit
Proudly Serving

100 West Cypress Creek Road, Suite 930

Fort Lauderdale, FL 33309

Office (954) 761-3700

Fax (954) 761-1004

8875 Hidden river PKWY, Suite 230

Tampa, FL 33637

Office (813) 775-2131

Fax (866) 388-3029

3500 Financial Plaza, Suite 330

Tallahassee, FL 32312

Office (850) 250-3830

Fax (866) 388-3029

FL Condo/Transient Rental Industry - Sales and Use Tax Issues and Savings Opportunities

The vacation rental market is a thriving and lucrative business here in Florida, and on a national level, that caters to seasonal residents and the tourism industry alike. Unfortunately, due largely to dire economic times, the Florida Department of Revenue and other states’ taxation agencies have targeted this industry for state and local tax audits. While many companies have underreported Florida sales and use tax, a tax audit can substantially impair a company’s financial health and even put a company out of business. As most of you are already aware, the vacation rental market businesses primarily generate revenue by renting, leasing, or granting licenses to use accommodations to guests for various durations. Many businesses also offer guests tangible personal property such as food and beverage sales, mini-bars, rentals of roll-a-way beds, as well as various services and conveniences.

What is often ignored or forgotten by many businesses in Florida is that many of these charges are subject to Florida sales tax. What is taxable? In Florida, the major taxable component is the rental of what is technically referred to as a transient rental or living a c c o m m o d a - tion. A transient accommodation is a “living quarter or sleeping or housekeeping accommodation in any hotel, motel, apartment house, multiple unit structure,” which includes condos. In addition, any mandatory charges by the owner or by the owner’s agent for the use of the transient rental are also taxable. Things like mandatory processing fees, cleaning fees, and booking fees are taxable if they are mandatorily imposed for the use of the rental property. It is these “other” mandatory charges that are often not correctly taxed by the condo owner or management company that can lead to large audit assessments by the State of Florida. Moreover, these charges are also subject to the Tourist Development Taxes (TDT) in many counties that are often at a rate as high as the state sales tax. As evidenced by the staggering increase of controversy by counties against the online travel companies (OTCs), such as Obritz, Expedia, and Travelocity, the counties have been as aggressive if not more aggressive than the Department of Revenue against companies for uncollected TDT. For Condo/Transient Rental Industry - Sales and Use Tax Issues and Savings Opportunities a more thorough analysis and update on the OTC litigation, please visit our firm’s blog page at http:// www.floridasalestax.com/FloridaTax-Law-Blog.aspx.

What is not taxable? The two major exceptions to the vacation rental industry are the “bona fide written lease” and the “continuous residence” exceptions. If a person has entered into a bona fide written lease for longer than 6 months or if an individual has continuously resided in a transient rental for longer than 6 months, then the transaction is exempt from tax. Both exceptions provide creative planning opportunities to reduce or eliminate the sales and use and the TDT taxes within the vacation rental industry. Furthermore, there are ways in which to structure transactions so that certain charges are optional, rather than mandatory, which make for a way to reduce or eliminate tax assessments, or to reduce costs in an extremely competitive marketplace. Specific planning opportunities and issues will be more thoroughly developed in the future newsletters.

Florida Sales Tax Vacation Rental

About the author: Mr. Donnini is a Florida Attorney and an associate in the law firm the Law Offices of Moffa, Sutton, & Donnini, P.A., in Fort Lauderdale, Florida. Mr. Donnini’s primary practice is Florida tax controversy. Mr. Donnini worked as an accountant for a public REIT prior going to law school and is currently pursuing his LL.M. in Taxation at NYU. If you have any questions please do not hesitate to contact the firm by phone or email via the links at the top of the page..

This article was originally published in April 2012 in the FVRMA E-News, the official electronic publication of the Florida Vacation Rental Managers Association. The original publication may be found be clicking on the following link: FVRMA E-NEWS - APRIL 2012

Social Media