Our word of the week is a phrase: Sales and Use Tax on Rental of Living or Sleeping Accommodations
Why is this important? This is a blog about condominium and homeowner associations, not rental apartments.
Well, unfortunately, many associations are now landlords, after having taken title on delinquent units that have been abandoned.
When this happens, it is a great opportunity for an association to recoup some long-lost revenue from a previously delinquent account. However, if you are not careful, your association could be subject to paying sales tax on this revenue.
If an Association owned unit is leased for a period less than six months, the Association owes 6% sales use tax to the State of Florida. Associations are only exempt from sales tax if a bona fide lease for a term six months or longer is signed and in place. If the bank forecloses in less than six months, it may not be necessary to pay taxes, as long as a lease is in place with the intent to lease for at least six months.
Make sure that a twelve month lease is signed before any Association owned unit can be leased. Otherwise, the Association owes tax and there are penalties and late fees if they are not paid on time.
Get more information here: Florida Sales Tax on Association Owned Rentals
Legal disclaimer - I am not an attorney. This should not be considered legal advice.