This is a preliminary guide for any investor purchasing a vacation home investment in Osceola, Polk, Lake and Orange 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 Collector.
To make it simple to remember, we have three levels of government. All three 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:
- —– City
- —– Subdivision or Zoning
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 ACCOUNTANT should start this process as soon as you decide to purchase a home in Florida. If you do not have an accountant that specializes in short term rentals near Disney your Realtor should be able to point you in the direction of one.
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 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 $5.00 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 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.
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 $121.00 plus $50. application fee. Then it would be $121.00 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.
Within the county your home is located in. There are subtle differences for Orange County, Polk County, Lake County and Osceola County short term rental laws.
For the County of Osceola you will need an occupational license which is $30.00 per year for each home and also a Resort tax number which is $5.00 with the application and $5.00 for every change you make thereafter.
I do suggest that you BE WISE and get in your name only, an individual tax number and license for your home. The pitfalls of an collective license and tax number will be explained later.
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.
The Disney area 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.
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 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 companies. 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.
If you’re in the market to invest in a sunny vacation home near Disney World in Orlando,Florida then lets talk money. These are five of the most common expenses that you could and most likely will incur when you own a vacation villa near Disney and use it for short term rental use. These are NOT your settlement expenses but rather your recurring expenses associated with ownership.
(For information on vacation home settlement expenses please contact us directly for a free quote)
1. Orlando Property Management (Villa Management) Fees
If you live outside of the Disney area (within a few hours or more) than management is a must in my opinion. They rent out and maintain your Disney area vacation villa, condo or townhouse for you.
Cost To You: $150 and up per month
2. Orlando Resort Community Amenity Fees
So you think that just because you own in the community means they let you use the amenities for free? Well they do (depends on your definition of free) but they certainly don’t let your lovely house guests. There are a handful of specific resort communities in Davenport and Kissimmee, Fl that tack on this lovely fee to you so that your guests can utilize amenities such as the pool and gym facilities.
Cost To You: Anywhere from $10 per each booking day on up to a flat fee of $250 per month on top of your management and HOA fees.
Read Also: Disney Area Vacation Home Communities That Charge Owners Amenity Fees
3. Orlando Homeowner’s Association Fees
Probably the most unavoidable fee that exists in Davenport, Kissimmee and Clermont vacation home communities. The fee you must pay to the homeowners association that covers that upkeep and maintenance of the community itself. This is important because if you do not pay this fee the HOA (homeowner’s association) can put a lien on your property.
Cost To You: Ranges from around $30 per quarter on up to over $250 per month
Read Also: 4 Davenport, FL Neighborhoods with Some of The Highest Homeowner’s Association Fees
4. Property Maintenance Fees
These fees are the costs of Orlando vacation home ownership. These fees include expenses such as:
- Pool maintenance
- Yard maintenance (sometimes covered by your HOA and sometimes not)
- Utility expenses (power, water, cable, phone etc)
Cost To You: Could start anywhere from $250 per month combined and can go up from there depending several factors. I always recommend to estimate higher than lower.
Request an Estimated Kissimmee, Davenport or Clermont Vacation Home Expense Sheet Specific To Your Purchase
5. City, County and State Short Term Rental Taxes
Just when you thought you were getting off easy here comes good old Uncle Sam with his hands in your vacation home. You will only incur these fees when you rent your property out not when you stay in it. You can only be taxed on money that you make so every booking is considered money you made according to the government. If you’re using a management company they usually take care of sending this money in for you. I still always recommend consulting with a Davenport, Kissimmee or Clemont vacation home tax specialist.
Cost To You: Usually around 13.5% with everything taken directly off the top of your booking revenue (percentage can vary depending on county)
6. Short Term Rental Insurance
This policy is required by just about any Davenport, Kissimmee or Clermont vacation home management company before they will rent your property out. The minimum coverage they require is usually around $1,000,000 but I have seen some companies willing to lower their requirements to half of that for coverage. In any event this vacation villa insurance policy is an expense you will have on top of your traditional homeowner’s insurance policy.
Cost To You: $1,000,000 policy’s range around $200-$300 per year.