Ultimate Guide to Buying & Owning a Florida Vacation Rental

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Do you own a Florida vacation rental property, or are you thinking about investing in one? Here are 8 essential things you need to know as you navigate Florida short-term rental licensing and operating regulations.

  1. What is considered a vacation rental in Florida?
  2. What permits or licenses are required to operate a Florida vacation rental?
  3. What taxes do vacation-rental owners have to pay?
  4. What are the requirements for maintaining a Florida vacation rental?
  5. As a vacation-property owner, how can I avoid fines or penalties?
  6. How often do I have to renew my rental license and pay fees?
  7. Is owning a Florida vacation rental a good investment?
  8. What Florida cities have the highest occupancy rates?

1. What Is Considered A Vacation Rental in Florida?

Florida state law defines a vacation rental as “any unit or group of units in a condominium or cooperative or any individually or collectively owned single-family, two-family, or four-family house or dwelling unit that is also a transient public lodging establishment but that is not a timeshare project.” 

That means just about any short-term rental that is not a time-share, hotel, resort, inn, bed-and-breakfast, or other rental property where the host lives on site at the property, can be considered a vacation rental. Owning one or more of these types of properties allows you to make a vacation rental offer on each.

2. What Permits Or Licenses Are Required To Operate A Florida Vacation Rental?

The state of Florida requires that all vacation rentals hold a current license issued through the Florida Department of Business and Professional Regulation (DBPR)

The Florida DBPR issues short-term or “transient” rental licenses according to these limits:

Vacation Rental – Condominium

A license will be issued for a unit or group of units in a condominium or cooperative.

Vacation Rental – Dwelling

A license will be issued for a single-family house, a townhouse, or a unit or group of units in a duplex, triplex, quadruplex, or other dwelling unit that has four or fewer units collectively.

The location of the property/unit, the number of units involved, and who operates the property/units determines who holds and maintains the license:

A Single license may include one single-family house or townhouse, or a unit or group of units within a single building that are owned and operated by the same individual person or entity, but not a licensed agent.

A Group license is a license issued to a licensed agent to cover all units within a building or group of buildings in a single complex.

A Collective license is issued to a licensed agent who represents a collective group of houses or units found on separate locations. A collective license is limited to 75 units or less and is restricted to counties within one district.

3. What Taxes Do Vacation-Rental Owners Have To Pay?

Guests who stay in short-term rentals in Florida are required to pay specific taxes as part of their total reservation fees. The property owner, or in some cases the listing company on behalf of the owner, then remits those taxes to the state of Florida. 

Currently, Florida charges a 6% state sales tax, plus any applicable discretionary sales surtax. In addition, some Florida counties impose their own local option taxes on short-term rental accommodations, such as the tourist development tax (TDT), convention development tax, tourist impact tax, or municipal resort tax. While these taxes may be paid to the county, they are always reported directly to the Department of Revenue.

4. What Are The Requirements For Maintaining A Florida Vacation Rental?

Some Florida counties may impose their own rules on what can and can’t be inside or outside a short-term rental unit. They may also mandate the use of a noise detection device, either inside the property, outside the property, or both, and may levy heavy fines if this requirement is not met. Some municipalities also have specific cleaning and sanitization requirements between guest stays, and these are subject to changes as COVID-related recommendations evolve, so it’s important that you pay attention to notifications from your county, and actively check in on updates regularly.

In general, though, these basic requirements govern all Florida short-term rental properties:

5. As A Vacation-Property Owner, How Can I Avoid Fines Or Penalties?

These are some of the most common situations that result in fines or penalties being levied against short-term rental owners in Florida:

The good news is that it is relatively easy to avoid profit-crushing fines and penalties by properly advertising the property to ensure that rules are prominently and clearly stated up front, pre-scheduling renewal payments before they are due, vetting guests before allowing them to book, and making sure that all features comply with the most recent short-term rental rules in the property’s city, county, and, in some cases, HOA.

6. How Often Do I Have To Renew My Rental License And Pay Fees?

Generally speaking, owners of Florida short-term rentals must renew rental licenses and/or permits annually. First-time fees are often higher, and decrease when renewed on an annual basis. There may be a nominal “application fee” as well. The total usually comes out to about $350 annually, including state and local fees, but can vary depending on the property’s specific municipality.

7. Is Owning A Florida Vacation Rental A Good Investment?

Owning a Florida vacation rental—whether on the Gold Coast, Emerald Coast, Gulf Coast, Palm Coast, in the Disney World Resort area, or in legendary Key West—can be an excellent way to generate passive income in today’s booming short-term rental market. The Sunshine State is, after all, one of the nation’s hottest spots for enjoying white sand beaches, sparkling blue ocean, world-class fishing and water activities, and ecological treasures like the Florida Everglades. It’s also the country’s fastest-growing market for short-term rentals, as savvy investors respond to travelers seeking more flexible, affordable alternatives to traditional hotel and resort stays.

With an occupancy rate of 50% or higher considered optimal for short-term rental profitability, Florida is a great bet for rental investors. According to top real-estate investment analytics site Mashvisor, 2020 was a big year for short-term rental occupancy in Florida, despite the global coronavirus pandemic, and the state is poised for an explosion in short-term rental business in 2021.

8. Florida Cities With The Highest Occupancy Rates

A glimpse at 2020’s Florida-city occupancy rates, according Mashvisor’s recent market analysis:

Cocoa Beach: 66.8%

St. Petersburg: 66.6%

Key West: 66.2%

Augustine: 65.1%

Orlando: 63.8%

Delray Beach: 61.3%

Palm Bay: 61.2%

Bradenton: 60.7%

Fort Walton Beach: 59.7%

Panama City Beach: 59.4%

Fort Myers Beach: 59.4%

Fort Lauderdale: 59.3%

Fort Myers: 58.7%

Miami: 58.6%

Miami Gardens: 58.1%

Boca Raton: 58.0%

Cape Coral: 57.9%

Clearwater: 57.5%

West Palm Beach: 57.4%

Pensacola: 57.1%

Daytona Beach: 57.0%

Marco Island: 56.8%

Tampa: 56.5%

Miami Beach: 56.3%

Panama City: 55.7%

Port St. Lucie: 55.7%

Lakeland: 55.6%

Vero Beach: 55.5%

Jacksonville: 55.1%

Crystal River: 55.0%

Lake Worth: 54.1%

Destin: 53.9%

Pompano Beach: 53.6%

Ocala: 53.5%

Madeira Beach: 52.8%

Naples: 52.7%

Deerfield Beach: 52.4%

Bonita Springs: 52.3%

Sarasota: 51.3%

Key Largo: 52.2%

Tallahassee: 49.9%

The Villages: 49.9%

Coral Gables: 49.9%

Along with projected high occupancy rates and increasing interest in short-term rental investing in the state, many municipalities are issuing new rules and ordinances designed to curtail excessive noise and parties, which may cause a disturbance for neighbors. By making sure that your property is protected against rowdy guests and raucous socializing, you aren’t just being a good short-term rental neighbor in your residential neighborhood, you’re ultimately ensuring your peace of mind, and securing your property against losses and damage. And that’s what smart real estate investing is really all about!