The short term rental market continues to grow and offer some of the best accommodations to be found in Central Florida also know as the Four Corners Area.
The ownership or management of a short term rental home can be a very satisfying experience. However there are laws and regulations that govern this industry. Learning and following these rules will help to ensure that your business runs smoothly.
We have compiled booklets for you to use as a reference guide. We can be reached by email MLesleyStone@gmail.com or for immediate answers call 407-846-8484 or text your questions to 732-446-9336.
For Information on:
- Osceola County
- Lake County
- Orange County
- Polk County
Any individual or company renting accommodations for 180 days or less shall be required to register with the following departments. Registration should be done in the order listed, before the unit or home is rented. However, if you are renting before registration and approval, the Sales and Resort taxes must be remitted to the Tax Collectors.
To make it simple to remember, we have 3 levels of government. All 3 levels have a part in this registration process.
- The Federal
- The State of Florida
- The County where the Home or Unit is located.
-----The County may have sublevels such as:
- Subdivision or Zoning
The first level requirement is the Federal or IRS. The owner or owners need to obtain an Identification Number issued by IRS for each owner listed on the DEED of the property. If it is a corporation then a Federal Tax ID number is issued to the corporation. For individuals that are United States citizens, the social security number is what will be used both on the contract when you purchase the home or unit and for the process of licensing the home and your tax requirements.
If you are not a US citizen you must obtain an Individual Tax Identification Number known as a ITIN before you can obtain a license, tax certificate or occupational license to operate your short term rental business. Ideally your REALTOR should start this process as soon as you decide to purchase a home in Florida.
For all non US citizens a W-7 needs to be filled out and then taken to the IRS office with your passport and another form of ID. The nearest office in Central Florida is at 850 Trafalgar Court, Suite 200, Maitland,
Florida. This application process can also be done at the US Embassy in your country. Once you have selected a property management company or rental revenue source, the form W-8ECI from every owner on the deed should be filled out and given to them. At year end you should each expect to receive a 1042S. All names on the deed will be expected to file a separate US tax return. When you set up your bank account a W-8BEN will be needed. Once this process has started you then proceed with the next level down.
The State of Florida Dept. of Revenue also known as DOR. Fill out the Florida Dept of Revenue Sales Tax application along with a fee and submit your request for a STATE sales tax certificate. If you have not received your (ITIN) Individual Tax Identification Number yet, please enter 'applied for' and you will be given a little time to operate your business until it is issued. Once it is issued update the applications.
Keep in mind that it does not matter where the rental / sale is finally made, whether you are here in Florida or from another State or Country or half way around the World and booking and receiving rent revenue for this home, the tax must be submitted back here in Florida. The State and County's position is that since the home is located here in Florida the money received is subject to a remittance of tax on the rental. It also does not matter whether you charged or collect a tax from the guest. You must calculate and remit a portion of the total collected for the accommodations and services to the State and County for the Sales and Resort tax.
If your property management company uses an umbrella certificate for the State of Florida, please BE WISE and get your own numbers. The pitfalls of an umbrella certificate will be explained later.
The next step on the State level is the licensing process with the Dept of Business and Professional Regulations. The license that you will be applying for is with the Division of Hotels and Restaurants. You are in fact getting a Hotel License. The first year is a license fee plus an application fee. Then it would be just the license fee for each renewal period. I do suggest that you BE WISE and get an individual license for your home/homes in your name only. The pitfalls of an collective license will be explained later.
The next step is with the County your home is located in. There are subtle differences for Orange County, Polk County, Lake County and Osceola County.
For the County of Osceola you will need an occupational license which is a fee per year for each home and also a Resort tax number which is another fee with the application and additional fees for every change you make thereafter. I do suggest that you BE WISE and get this in your name only, an individual tax number and license for each of your home / homes. The pitfalls of an collective license and tax number will be explained later.
The next sublevel is the City. In this case, we will use Kissimmee within the City itself. You must obtain a license too. If you are outside the Kissimmee City limits but still in Kissimmee, there is no city license requirement for you.
Finally. the Subdivisions have to be zoned for short term rentals or documented that short term rentals are permitted. You should register your home with your subdivision Homeowners Association and subscribe to receive the newsletter that they publish.
These homes or units will now be operating as a business and you will be responsible for remitting Sales and Resort taxes on your rentals. If someone else is remitting part of the tax, follow up that its been paid as you are ultimately responsible even if they collected and did not remit it.
We suggest that each home apply for and maintain their own individual numbers for the Sales Tax, Hotel License, Occupational License, and Resort Tax. This should be required for each individual home. Though some property management companys have chosen differently, try to operate your business as your business and keep control of your assets and money. There is no reason that a property management company should have control over your bank account and bills. . Keep control over your assets and money. In today's age of computers and high tech, your utility bills can come directly from your own bank account account that you set up here in Central Florida. The set up fee or escrow deposit should go into your own bank account and every rental that the management company gives you can be deposited into that account to keep the funds flowing. Copies of these bills can be given to the management company to verify they are being paid but the management company does not have control over them. This becomes very important if you switch management companys. You will not be temporarily out of business until licenses and utilities transfer. Do it wisely from the start and you should have no down time. No lost revenues. No shut off utilities and new deposits being required. No new licenses needing to be paid for again. The reason we take this position is because although you might have selected a property management to look after this home, it is the home that is regulated and assessed. If there is a violation from any of the above agencies, the home and homeowner are effected. You as an owner are responsible for the actions of your property management company.
Please get involved and keep up to date with your investment.
There are seminars you can attend that go into great detail about short term rentals and marketing techniques. These classes will also aid you if you need assistance with understanding the costs of ownership and help computing your breakeven analysis. If you would like to attend, let me know. We have compiled booklets for you to use as a reference guide. I can be reached by email MLesleyStone@gmail.com or for immediate answers call 407-846-8484 or text your questions to 732-446-9336