Taxes for short term rentals in Polk and Osceola County
The following taxes affect vacation rental homes:
· Real estate property taxes
· Tangible personal property taxes
· Federal taxes
· State resort dwelling license
· Local business tax
· State sales tax
· Tourist development tax
We can assist with the state resort dwelling license (annual), local business tax (annual), sales and tourist development tax. We provide 1099's annually for individuals for federal tax returns as well.
Real Estate Property Taxes
The term real estate tax is a common reference to a tax on real property. For vacation homeowners real property refers to land, dwelling, fixtures, and all other improvements to the land.
Real estate taxes consist of ad valorem taxes, which are based upon the assessed value of real property, and non-ad valorem assessments, which are levies based on the cost of providing a service such as fire protection and garbage collection.
Ad valorem assessments are made each January 1st. The ad valorem tax roll is certified to the Tax Collector by the Property Appraiser, who determines the assessed value of property.
The Board of County Commissioners, School Board, municipalities, and other ad valorem taxing bodies set the millage rates for properties within their boundaries. The millage rate is the dollar amount to be paid in taxes for every $1,000 of appraised valuation. A mill is equal to 1 tenth of 1 percent.
Non-ad valorem assessment rolls are certified to the Tax Collector by local governing boards or non-ad valorem assessing authorities, such as the Solid Waste Authority, fire districts and water control districts.
Tangible Personal Property Taxes
With regard to vacation home rentals, the term tangible personal property taxes refers to ad valorem taxes on the assessed value of furniture, fixtures, and equipment located in the business rental dwelling. As with any other business, the owner is required to file a Tangible Personal Property Tax Return EACH YEAR by April 1st. A Tangible Personal Property Tax Exemption is available for tangible property that is valued less than $25,000. However, the property owner is required to file a Tangible Personal Property Tax Return to qualify for the exemption.
The Tangible Personal Property Tax Return must be mailed to the Property Appraiser of the county in which the furnished rental unit is located. Just like ad valorem real estate taxes, ad valorem taxes on tangible personal property are levied annually and assessments are made each January 1st. The ad valorem tax roll is also certified to the Tax Collector by the Property Appraiser, who determines the assessed value of property.
The Board of County Commissioners, School Board, municipalities, and other ad valorem taxing bodies set the millage rates for such property within their boundaries. The millage rate is the dollar amount to be paid in taxes for every $1,000 of appraised valuation. A mill is equal to 1 tenth of 1 percent.
State Resort Dwelling License
Prior to engaging in regular vacation home rentals, the rental property must have a resort dwelling license from the Florida Department of Business and Professional Regulation, Division of Hotels & Restaurants.
A resort dwelling is any individually or collectively owned one-family, two-family, three-family, or four family dwelling house or dwelling unit which is rented more than three times in a calendar year for periods of less than 30 days or one calendar month, whichever is less, or which is advertised or held out to the public as a place regularly rented for periods of less than 30 days or one calendar month, whichever is less.
Florida Department of Business and Professional Regulation, Division of Hotels & Restaurants inspects the dwelling prior to issuing the state license and conducts period inspection thereafter.
Current rates are $220 for an initial application and $170 annually if payment is made before the cutoff date.
Local Business Taxes
The annual payment of a local business tax is often required for the privilege of doing business in a Florida county and/or municipality. Payment is required prior to engaging in any rental activity. Upon payment, a local business tax receipt is issued and should be appropriately displayed at the dwelling location.
Local business tax requirements and payment amounts may significantly vary, depending on the governing county and, when applicable, municipality. For example, each vacation rental dwelling in Polk/Osceola County, Florida is required to have a local business tax receipt, while similar rental dwellings in other counties or municipalities may not be required to have a local business tax receipt or only their management company has a local business tax receipt.
When counties require the payment of local business taxes, the Tax Collector administers the tax program and collects the taxes due. When a municipality requires payment of local business taxes, it may identify one of its departments or an agency to administer local business tax collections.
In any case, the vacation home owner or their property manager should contact the Tax Collector, and, when applicable, the municipality, to find out their local business tax requirements.
Prior to obtaining a local business tax receipt, proof of a vacation rental dwelling license from the Florida Department of Business and Professional Regulation, Division of Hotels & Restaurants is required. In some cases, local governing authorities may also require proof of compliance in areas such as zoning and fire prevention regulations.
State Sales Taxes
Florida sales tax applies to the rental or lease of a vacation rental dwelling. The sales tax is added to the price of the vacation home rental and is collected from the purchaser at the time of sale.
Florida’s general sales tax rate is 6 percent
Prior to engaging in the vacation home rental business, the vacation homeowner must be registered as a sales tax dealer with the Florida Department of Revenue. Additionally, the property manager must be be registered as a sales tax dealer with the Florida Department of Revenue.
Additional sales tax rates
Many, but not all, Florida counties also impose a discretionary sales surtax, sometimes referred to as a county tax. The discretionary sales surtax is a county- imposed tax and varies from county to county. Sales tax dealers must collect the applicable county discretionary sales surtax along with the 6 percent state sales tax and remit both taxes to the Florida Department of Revenue .
Note: County discretionary sales surtax rates are available from the Department of Revenue.
Sales taxes are generally collected from VRBO/Airbnb but some accounts may differ.
Tourist Development Taxes
Vacation rental home owners are also responsible for paying tourist development taxes. Tourist development taxes are also known as a “resort taxes” or “bed taxes.” The tourist development tax is a tax on the total rental amount received from the purchaser of a rental accommodation for a period of six (6) months or less. Basically, the tourist development tax is an “add on” sales tax that is derived from the same laws governing state sales taxes.
Like the discretionary state sales surtax or “county sales tax,” many, but not all, Florida counties have adopted a tourist development tax and, as such, these tax rates vary from county to county.
However, tourist development taxes are remitted to the designated local administrator. The local administrator can vary from county to county. For example, in Polk County the local administrator is the Tax Collector, while in Orange County the local administrator is the Comptroller.
Tourist development tax is currently 6%. Sales and Tourist Development Tax is currently 13.5% for Osceola whereas it is 12% for Polk.
Federal Income Taxes
Complying with federal income taxes can be very complicated and tax determinations may vary widely depending on such matters as business type or status, as well as income level, etc. When and where income tax returns are filed can also vary according to the taxpayer’s situation.
Vacation homeowners are advised to consult with tax professionals or seek advice from the Internal Revenue Service before filing their federal income tax returns.
Generally, U.S. citizens who are vacation rental homeowners are required file a federal income tax return with the Internal Revenue Service.
Capital gains income or the profit from the sale of a vacation rental home must also be reported to the Internal Revenue Service.
Many vacation rental homeowners are owned by foreigners. Foreign vacation rental homeowners must obtain an Individual Tax Identification Number (ITIN) from the Internal Revenue Service, as well as file their income tax returns with that agency. Withholding requirements also apply to foreign owners upon the sale of their real property The Tax Collector consolidates the certified ad valorem and non-ad valorem tax rolls and mails tax notices to property owners. Ad valorem and non-ad valorem assessments are due beginning November 1st or soon after the tax roll is certified. Tax notices are mailed October 31st based on current addresses maintained by the Property Appraiser's Office.
Regardless of whether a tax notice is received Florida law makes taxpayers responsible for knowing that their property taxes are due each year. If you do not receive a real estate tax notice by November 15th contact the Tax Collector’s Office.
Ad valorem and non-ad valorem assessments become delinquent on April 1st