In addition to U.S. income taxes, there are local and state taxes which may also require action on the part of the owner. These taxes apply equally to all owners of rental real estate in Florida, whether resident or nonresident. Below is a listing of other taxes which may apply to rental property:
Florida Sales Tax:
If your residential property is leased out for periods of 6 months or less, you are required to collect and remit Florida sales tax on the amount of rental income collected. Although the sales tax is imposed on the tenant, the property owner is ultimately responsible for the collection and remittance of the tax to the Florida Department of Revenue. If you use a management company for your property, please confirm that they are collecting and remitting the sales tax on your behalf. The current sales tax rate in Sarasota County is 7% and the current rate in Manatee County is 6.5%.
County Tourist Development Tax:
Revenue from residential rentals of 6 months or less is subject to the Tourist Development Tax. This tax is also imposed on the tenant, but the property owner is ultimately responsible for the collection and remittance the tax. Unlike the sales tax, which is paid to the Florida Department of Revenue, this tax is paid to the county in which your property is physically located. If you use a management company for your property, they should be collecting and remitting the tourist development tax on your behalf. The current rate in Sarasota County is 5% and the current rate in Manatee County is 5% of the amount of rental income collected.
The focus of this article has been on residential rental real estate. The Florida sales tax is payable on income from commercial rental real estate regardless of the term of the lease period. The county tourist development tax does not apply to commercial rental real estate.
Even though the tenant is the party who should be bearing the cost, the owner is responsible for paying the tax out of their own pocket if they neglect to collect from the tenant. Failure to timely file and remit these taxes can result in substantial penalties and interest being assessed upon the owner of the property. It is imperative that the owner of the property register with the applicable agency as soon as they become subject to these taxes so they can properly remit them on a timely basis.