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Florida Vacation Rental Act would hand regulation to state government

  • Feb 7, 2018 | MyLodgeTax

A controversial bill making its way through the Florida Legislature would transfer power over short-term vacation rentals to the state, eliminating regulation by local governments.

Senate Bill 1400, sponsored by Senator Greg Steube would place short-term vacation rentals under the authority of the state’s Division of Hotels and Restaurants and prohibit local communities from making their own rules for the industry.

The proposal, known as the Florida Vacation Rental Act, would also require all vacation rental hosts to be licensed and collect lodging and sales taxes. License fees would be capped at $1,000. Applicants found guilty in the past five years of certain crimes — including prostitution offenses, keeping a disorderly place, or illegally dealing in controlled substances — could be denied short-term vacation rental licenses.

Proponents of the measure, including the Florida Chamber of Commerce, claim it protects the property rights of vacation rental owners, encourages tourism, and keeps Florida proactive in a new sharing economy.

The proposed legislation would affect a growing $30 billion industry. According to Airbnb, around 40,000 Florida Airbnb hosts welcomed 2.7 million guests and earned a combined $450 million in 2017.

The Florida League of Cities opposes the bill on the grounds that it takes power away from local governments and imposes one-size-fits-all rules on communities with very diverse situations. The Florida Restaurant & Lodging Association also came out against the bill, characterizing vacation rental properties as illegal commercial operators that could put Florida’s hospitality reputation at risk. Others say short-term vacation rentals can disrupt neighborhoods and allow commercial enterprises where they would not otherwise be allowed.

Steube’s legislation has been referred to the Community Affairs, Regulated Industries, and Appropriations committees. Steube sponsored a similar bill last year that passed the House but failed to pass the Senate.

Currently, local governments can regulate short-term rentals in some ways, but state law prevents them from banning short-term vacation rentals or regulating how often properties can be rented out or how long guests must stay. However, local regulations that were in place by June 1, 2011, are grandfathered in and can override the state restrictions. The result is a patchwork of different rules for vacation rentals in different communities throughout the state.

Airbnb has an agreement with Florida to collect state and local sales taxes on Florida bookings and pass those revenues on to the state. It has similar deals with 38 Florida counties to collect additional lodging taxes on Airbnb bookings.

Ultimately, hosts are responsible for collecting all state and local taxes on accommodations, so they need to be aware of which taxes Airbnb is — or is not — collecting on their behalf. In Florida counties that don’t have a tax-collection agreement with Airbnb, the company collects state taxes on behalf of hosts, but hosts must manage county taxes on their own.

Vacation rental operators also need to keep in mind that other online booking services, such as VRBO or HomeAway, do not collect any taxes on their behalf, so operators must collect all taxes for those bookings.

Lodging tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
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