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.
- What is considered a vacation rental in Florida?
- What permits or licenses are required to operate a Florida vacation rental property?
- What taxes do vacation-rental owners have to pay?
- What are the requirements for maintaining a Florida vacation rental property?
- As a vacation-property owner, how can I avoid fines or penalties?
- How often do I have to renew my rental license and pay fees?
- Is owning a Florida vacation rental property a good investment?
- 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 Florida vacation rental properties allows you to make a vacation rental offer on each.
2. What Permits Or Licenses Are Required To Operate A Florida Vacation Rental Property?
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 Property?
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:
- The establishment must display all current licenses or copies of licenses in a conspicuous place on the premises.
- The unit must be kept clean, safe and in good physical condition.
- If bedding and linens are provided, they must be clean, unworn and properly stored. Mattress pads, bed sheets and blankets must be appropriately to the mattress or bed so that the entire sleeping area of the mattress is covered. Sheets and pillowcases must be in good condition, and cleaned and changed between each guest or once a week, whichever occurs first. Bedding items, such as mattresses, comforters and pillows must be thoroughly aired, disinfected and kept clean.
- If provided, make soap available either in individually wrapped bars or as liquid soap in a dispenser.
- Baby cribs provided to guests must meet safety standards established by the Consumer Products Safety Commission.
- If you provide dishes and glassware, you must sanitize all of them between guests. Proper warewashing requires a three-compartment sink or commercial dish-washing machine. Vacation rentals and timeshare projects that do not have the facilities to comply with this requirement must post a notice informing guests that the dishes and glassware have not been sanitized according to public food service establishment standards. The notice must include the specific language on the notice available from the division.
- The establishment must be kept free of vermin.
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:
- Required licenses or permits are not obtained before renting the property, or are allowed to expire while the property continues to be rented.
- Required taxes are not paid, or are paid late.
- The property is not in compliance with state or local short-term rental requirements—for example, in Hollywood, Fla., as of April 1, 2021, a vacation-property owner may be fined $250 for a first offense, $500 for a second offense, and subsequently more, if their property is found to not have an approved noise level detection device installed.
- Occupancy violations are allowed to take place consistently.
- Parking restrictions are violated.
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 Property 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, 2022 was a big year for short-term rental occupancy in Florida. Occupancy rates in the most popular Florida destination cities ranged from 65% to 98%, which, at its lowest, is still significantly more than the U.S. average of just under 50% occupancy.
8. Florida Cities With The Highest Occupancy Rates
A glimpse at 2022’s Florida-city occupancy rates, according Mashvisor’s recent market analysis:
Key West: 66.2%
Delray Beach: 61.3%
Palm Bay: 61.2%
Fort Walton Beach: 59.7%
Panama City Beach: 59.4%
Fort Myers Beach: 59.4%
Fort Lauderdale: 59.3%
Fort Myers: 58.7%
Miami Gardens: 58.1%
Boca Raton: 58.0%
Cape Coral: 57.9%
West Palm Beach: 57.4%
Daytona Beach: 57.0%
Marco Island: 56.8%
Miami Beach: 56.3%
Panama City: 55.7%
Port St. Lucie: 55.7%
Vero Beach: 55.5%
Crystal River: 55.0%
Lake Worth: 54.1%
Pompano Beach: 53.6%
Madeira Beach: 52.8%
Deerfield Beach: 52.4%
Bonita Springs: 52.3%
Key Largo: 52.2%
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!