Renting on websites like Airbnb, VRBO or other online rental sites has become very popular for homeowners with properties in popular destinations like Florida. The sites are easy to use and setup for renting but usually don’t tell you very much about your particular state, local or community restrictions or the requirement of collecting state and county taxes. Many homeowners simply put their homes on these websites without being informed or doing their own research and then later receive a notice that they are in violation of state, city, county or association ordinance or law. It is not always easy to find out if you’re in compliance and it takes a bit of research to determine if you are truly ready to rent your home on a rental website.
As an example I will use the Florida Keys in Monroe County, Florida which is a popular tourist area but this example will apply in some way to most locations. If you want to rent a home in the Florida Keys you have to first be aware of its location to determine what length of time you are allowed to rent. Buried in the county’s website is a map with color shading and codes which you have to decipher to determine what length of time your location is allowed to rent. This determination is crucial as to whether you can even advertise or rent less than the restrictive 28 day limit imposed by Monroe County Code 134-1 (k). The code is confusing and arbitrary in that it applies to certain areas and not others and basically has the effect of pit falling homeowners into violation that have not properly researched the ordinance and its restrictions. In certain areas like Islamorada and Marathon for instance, you can rent for less than 28 days but not less than 7 days. As an owner, the disparate treatment between owner’s property rights to rent seem unfair where some property owners just because of their location have a further right to the use of their land than other similarly situated homeowners in the general area.
The county has investigators combing rental websites and posing as interested renters and if your home is simply advertised for nightly rentals (whether or not it is being rented on a nightly basis) the county will claim a violation of the code by merely “advertis(ing) or hold(ing) out for rent.” Advertising alone according to the code is sufficient for a code violation. The county doesn’t send first time violators a courtesy notice for compliance, instead it sends a violation notice and hearing date to assess a hefty fine. The Board of County Commissioners has developed or internally agreed to the imposition of a fine for first time violators by multiplying the nightly advertised rental rate by 30 (30 days of rentals) which in most cases amounts to thousands of dollars in fines for first time violators. The Monroe County website seems to bury any information as to rentals, in its “Links for Residents” page and it fails to provide any useful information for homeowners who want to rent their homes. You have to know that on the code enforcement page they have something called “Vacation Rental Program” which may or may not apply to you depending on the location of your home to determine what applies to your situation.
Fines Imposed for Violation of Ordinance
As you can imagine, the number of homeowners who are first time violators is enormous and the county holds hearings where the room is filled with first time violators who look like dear in the headlights, the county attorney after hearing the evidence presented by the investigator recommends to the magistrate judge the imposition of the hefty fine and the magistrate judge finds the homeowner in violation and imposes the hefty fine or reduces somewhat the fine as he/she sees fit. The practice of imposing these hefty fines for first time violators in my opinion is as a revenue stream for the county which I am sure represents millions in revenue and is why they do not provide first time violators with a simple notice for compliance and why the information is buried on their website. I am sure most first time violators would comply with the ordinance if they were simply noticed for non-compliance.
Ordinance History
The county’s stance and the history behind the ordinance seem to be that the 28 day restriction was imposed to protect neighborhoods from the impact of transient tenants on the surrounding area including the environment and to provide affordable housing. If this is so, why doesn’t it apply to every single residence in all of Monroe County. This claim is a falsehood in that the properties are meant to be occupied at all times by the number of tenants the property was designed to hold and permitted by the county for its impact to the surrounding area. I have found no evidence which shows that the cost of housing is reduced or more affordable because this ordinance is in place. Homeowners can find many more tourists/renters willing to rent for a shorter period of time and pay a higher rate than renters willing to rent for a minimum of a month at a lesser rate. The Florida Keys is constantly advertising to bring in more tourism, these homes are perfect for short term visitors who are seeking the comforts of a home which often times is more affordable than a hotel. Allowing shorter term rentals would make the area more alluring to visitors and more beneficial to the surrounding businesses in the area and generally more tax revenue for the county. Most short term renters in the Florida Keys are looking to stay for a few days maybe a week and enjoy the various water activities in the area and the local dining and shopping.
Whether the imposition of the county ordinance is a restraint on a homeowner’s rights or whether other similarly situated homeowners are being treated differently by not having to comply with this ordinance or whether this ordinance serves to protect the surrounding neighborhoods or provide more affordable housing or whether its true purpose is to lessen competition with hotels are all worthy debates which should be further discussed and possibly changed by the voters of Monroe county.
State and Local Taxes
In Monroe County, once you determine whether your property falls under the 28 day ordinance, your not ready to rent, you must then determine whether Airbnb or other advertising company is paying the occupancy taxes of the state and any local taxes. For instance, Airbnb on its website states that it is paying the state and local taxes for the property. If you look at the setting for Gross Earnings on the Airbnb tab under “Progress” and “Transaction History” they will provide you the occupancy tax that they are collecting and paying on your behalf. Normally, the Florida Department of Revenue requires you to register and pay this tax annually, quarterly or monthly, when I inquired as to registration, a representative stated that since Airbnb was paying directly, the requirement to file and register was basically waived but you could register if but would not need to file. I suggest calling the Florida Department of Revenue and the Monroe County Tax Collector’s office and confirming your tax filing requirements before placing your property for rent to make sure you are in compliance.
Conclusion
As described in the example above with the Florida Keys, it is imperative that you do the necessary research before placing or having someone place your property for rent online as you could be heavily fined for renting or even just advertising for rent in places like the Florida Keys. Also, don’t forget to contact your state and local taxing authority to make sure you are in compliance with any reporting requirements. If you have any questions or have received a notice please don’t hesitate in contacting our offices.
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